Correlation Between RCS MediaGroup and BW Offshore
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup 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 RCS MediaGroup and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and BW Offshore Limited, you can compare the effects of market volatilities on RCS MediaGroup 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 RCS MediaGroup with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and BW Offshore.
Diversification Opportunities for RCS MediaGroup and BW Offshore
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCS and BWOFY is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA 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 RCS MediaGroup 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 RCS MediaGroup SpA 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 RCS MediaGroup i.e., RCS MediaGroup and BW Offshore go up and down completely randomly.
Pair Corralation between RCS MediaGroup and BW Offshore
Assuming the 90 days horizon RCS MediaGroup is expected to generate 1.94 times less return on investment than BW Offshore. But when comparing it to its historical volatility, RCS MediaGroup SpA is 2.44 times less risky than BW Offshore. It trades about 0.14 of its potential returns per unit of risk. BW Offshore Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 461.00 in BW Offshore Limited on September 4, 2024 and sell it today you would earn a total of 94.00 from holding BW Offshore Limited or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
RCS MediaGroup SpA vs. BW Offshore Limited
Performance |
| Timeline |
| RCS MediaGroup SpA |
| BW Offshore Limited |
RCS MediaGroup and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCS MediaGroup and BW Offshore
The main advantage of trading using opposite RCS MediaGroup and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup 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.| RCS MediaGroup vs. Legible | RCS MediaGroup vs. Sylvania Platinum Limited | RCS MediaGroup vs. Thunderbird Entertainment Group | RCS MediaGroup vs. PAX Global Technology |
| BW Offshore vs. Relx PLC ADR | BW Offshore vs. RCS MediaGroup SpA | BW Offshore vs. Sapiens International | BW Offshore vs. Dave Busters Entertainment |
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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