Correlation Between Transocean and OFX Group
Can any of the company-specific risk be diversified away by investing in both Transocean and OFX Group 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 Transocean and OFX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transocean and OFX Group Ltd, you can compare the effects of market volatilities on Transocean and OFX Group 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 Transocean with a short position of OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transocean and OFX Group.
Diversification Opportunities for Transocean and OFX Group
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transocean and OFX is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group and Transocean 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 Transocean are associated (or correlated) with OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Transocean i.e., Transocean and OFX Group go up and down completely randomly.
Pair Corralation between Transocean and OFX Group
Considering the 90-day investment horizon Transocean is expected to under-perform the OFX Group. But the stock apears to be less risky and, when comparing its historical volatility, Transocean is 1.37 times less risky than OFX Group. The stock trades about -0.03 of its potential returns per unit of risk. The OFX Group Ltd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 440.00 in OFX Group Ltd on August 24, 2024 and sell it today you would earn a total of 293.00 from holding OFX Group Ltd or generate 66.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transocean vs. OFX Group Ltd
Performance |
| Timeline |
| Transocean |
| OFX Group |
Transocean and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transocean and OFX Group
The main advantage of trading using opposite Transocean and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transocean position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.| Transocean vs. Nabors Industries | Transocean vs. Precision Drilling | Transocean vs. Seadrill Limited | Transocean vs. Patterson UTI Energy |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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