Correlation Between Edinburgh Investment and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Edinburgh Investment 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 Edinburgh Investment and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edinburgh Investment Trust and BW Offshore, you can compare the effects of market volatilities on Edinburgh Investment 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 Edinburgh Investment with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edinburgh Investment and BW Offshore.
Diversification Opportunities for Edinburgh Investment and BW Offshore
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Edinburgh and 0RKH is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Edinburgh Investment Trust and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Edinburgh Investment 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 Edinburgh Investment Trust 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 Edinburgh Investment i.e., Edinburgh Investment and BW Offshore go up and down completely randomly.
Pair Corralation between Edinburgh Investment and BW Offshore
Assuming the 90 days trading horizon Edinburgh Investment Trust is expected to generate 0.42 times more return on investment than BW Offshore. However, Edinburgh Investment Trust is 2.4 times less risky than BW Offshore. It trades about 0.16 of its potential returns per unit of risk. BW Offshore is currently generating about -0.01 per unit of risk. If you would invest 74,320 in Edinburgh Investment Trust on November 4, 2024 and sell it today you would earn a total of 1,980 from holding Edinburgh Investment Trust or generate 2.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Edinburgh Investment Trust vs. BW Offshore
Performance |
| Timeline |
| Edinburgh Investment |
| BW Offshore |
Edinburgh Investment and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edinburgh Investment and BW Offshore
The main advantage of trading using opposite Edinburgh Investment and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edinburgh Investment 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.| Edinburgh Investment vs. Bank of Ireland | Edinburgh Investment vs. MT Bank Corp | Edinburgh Investment vs. Berner Kantonalbank AG | Edinburgh Investment vs. Creo Medical Group |
| BW Offshore vs. Ecclesiastical Insurance Office | BW Offshore vs. Erste Group Bank | BW Offshore vs. Zurich Insurance Group | BW Offshore vs. Cembra Money Bank |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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