Correlation Between Dno ASA and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Dno ASA and BW 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 Dno ASA and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dno ASA and BW Offshore, you can compare the effects of market volatilities on Dno ASA and BW 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 Dno ASA with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dno ASA and BW Offshore.
Diversification Opportunities for Dno ASA and BW Offshore
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dno and BWO is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Dno ASA 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 Dno ASA are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Dno ASA i.e., Dno ASA and BW Offshore go up and down completely randomly.
Pair Corralation between Dno ASA and BW Offshore
Assuming the 90 days trading horizon Dno ASA is expected to generate 3.07 times less return on investment than BW Offshore. In addition to that, Dno ASA is 1.1 times more volatile than BW Offshore. It trades about 0.01 of its total potential returns per unit of risk. BW Offshore is currently generating about 0.04 per unit of volatility. If you would invest 2,092 in BW Offshore on August 25, 2024 and sell it today you would earn a total of 773.00 from holding BW Offshore or generate 36.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dno ASA vs. BW Offshore
Performance |
| Timeline |
| Dno ASA |
| BW Offshore |
Dno ASA and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dno ASA and BW Offshore
The main advantage of trading using opposite Dno ASA and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dno ASA position performs unexpectedly, BW 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Dno ASA vs. Aker Solutions ASA | Dno ASA vs. Storebrand ASA | Dno ASA vs. Frontline | Dno ASA vs. Subsea 7 SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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