Correlation Between NYSE Composite and BW Offshore
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and BW Offshore Limited, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and BW Offshore.
Diversification Opportunities for NYSE Composite and BW Offshore
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and BWOFY is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited and NYSE Composite 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 NYSE Composite 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 Limited has no effect on the direction of NYSE Composite i.e., NYSE Composite and BW Offshore go up and down completely randomly.
Pair Corralation between NYSE Composite and BW Offshore
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.52 times more return on investment than BW Offshore. However, NYSE Composite is 1.94 times less risky than BW Offshore. It trades about 0.08 of its potential returns per unit of risk. BW Offshore Limited is currently generating about 0.04 per unit of risk. If you would invest 1,529,105 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 491,877 from holding NYSE Composite or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.42% |
| Values | Daily Returns |
NYSE Composite vs. BW Offshore Limited
Performance |
| Timeline |
NYSE Composite and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
BW Offshore Limited
Pair trading matchups for BW Offshore
Pair Trading with NYSE Composite and BW Offshore
The main advantage of trading using opposite NYSE Composite and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| BW Offshore vs. Legacy Education | BW Offshore vs. Apple Inc | BW Offshore vs. NVIDIA | BW Offshore vs. Microsoft |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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