Correlation Between SeaBird Exploration and BW Offshore
Can any of the company-specific risk be diversified away by investing in both SeaBird Exploration 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 SeaBird Exploration and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SeaBird Exploration Plc and BW Offshore, you can compare the effects of market volatilities on SeaBird Exploration 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 SeaBird Exploration with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of SeaBird Exploration and BW Offshore.
Diversification Opportunities for SeaBird Exploration and BW Offshore
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SeaBird and BWO is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SeaBird Exploration Plc and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and SeaBird Exploration 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 SeaBird Exploration Plc 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 SeaBird Exploration i.e., SeaBird Exploration and BW Offshore go up and down completely randomly.
Pair Corralation between SeaBird Exploration and BW Offshore
Assuming the 90 days trading horizon SeaBird Exploration Plc is expected to generate 1.09 times more return on investment than BW Offshore. However, SeaBird Exploration is 1.09 times more volatile than BW Offshore. It trades about -0.06 of its potential returns per unit of risk. BW Offshore is currently generating about -0.34 per unit of risk. If you would invest 592.00 in SeaBird Exploration Plc on December 4, 2024 and sell it today you would lose (15.00) from holding SeaBird Exploration Plc or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SeaBird Exploration Plc vs. BW Offshore
Performance |
| Timeline |
| SeaBird Exploration Plc |
| BW Offshore |
SeaBird Exploration and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SeaBird Exploration and BW Offshore
The main advantage of trading using opposite SeaBird Exploration and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SeaBird Exploration 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.| SeaBird Exploration vs. Electromagnetic Geoservices ASA | SeaBird Exploration vs. TGS NOPEC Geophysical | SeaBird Exploration vs. Solstad Offsho | SeaBird Exploration vs. Prosafe SE |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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