Correlation Between BG Foods and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both BG Foods and Solstad Offshore at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BG Foods and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BG Foods and Solstad Offshore ASA, you can compare the effects of market volatilities on BG Foods and Solstad Offshore and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BG Foods with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of BG Foods and Solstad Offshore.
Diversification Opportunities for BG Foods and Solstad Offshore
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DHR and Solstad is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding BG Foods and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and BG Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BG Foods are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of BG Foods i.e., BG Foods and Solstad Offshore go up and down completely randomly.
Pair Corralation between BG Foods and Solstad Offshore
Assuming the 90 days trading horizon BG Foods is expected to under-perform the Solstad Offshore. But the stock apears to be less risky and, when comparing its historical volatility, BG Foods is 1.05 times less risky than Solstad Offshore. The stock trades about -0.02 of its potential returns per unit of risk. The Solstad Offshore ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Solstad Offshore ASA on October 16, 2024 and sell it today you would earn a total of 8.00 from holding Solstad Offshore ASA or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BG Foods vs. Solstad Offshore ASA
Performance |
| Timeline |
| BG Foods |
| Solstad Offshore ASA |
BG Foods and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BG Foods and Solstad Offshore
The main advantage of trading using opposite BG Foods and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BG Foods position performs unexpectedly, Solstad Offshore can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| BG Foods vs. BJs Wholesale Club | BG Foods vs. SPARTAN STORES | BG Foods vs. Japan Tobacco | BG Foods vs. Scandinavian Tobacco Group |
| Solstad Offshore vs. Cal Maine Foods | Solstad Offshore vs. BG Foods | Solstad Offshore vs. Clean Energy Fuels | Solstad Offshore vs. USWE SPORTS AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |