Correlation Between Retail Estates and BW OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and BW OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and BW OFFSHORE LTD, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of BW OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and BW OFFSHORE.
Diversification Opportunities for Retail Estates and BW OFFSHORE
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Retail and XY81 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and BW OFFSHORE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW OFFSHORE LTD and Retail Estates 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 Retail Estates NV 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 LTD has no effect on the direction of Retail Estates i.e., Retail Estates and BW OFFSHORE go up and down completely randomly.
Pair Corralation between Retail Estates and BW OFFSHORE
Assuming the 90 days horizon Retail Estates NV is expected to under-perform the BW OFFSHORE. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 2.65 times less risky than BW OFFSHORE. The stock trades about -0.15 of its potential returns per unit of risk. The BW OFFSHORE LTD is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 272.00 in BW OFFSHORE LTD on October 12, 2024 and sell it today you would lose (11.00) from holding BW OFFSHORE LTD or give up 4.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Retail Estates NV vs. BW OFFSHORE LTD
Performance |
| Timeline |
| Retail Estates NV |
| BW OFFSHORE LTD |
Retail Estates and BW OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and BW OFFSHORE
The main advantage of trading using opposite Retail Estates and BW OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Superior Plus Corp | Retail Estates vs. NMI Holdings | Retail Estates vs. SIVERS SEMICONDUCTORS AB | Retail Estates vs. Talanx AG |
| BW OFFSHORE vs. CarsalesCom | BW OFFSHORE vs. SANOK RUBBER ZY | BW OFFSHORE vs. Mitsubishi Materials | BW OFFSHORE vs. Vulcan Materials |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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