Correlation Between SeaBird Exploration and Western Bulk
Can any of the company-specific risk be diversified away by investing in both SeaBird Exploration and Western Bulk 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 Western Bulk 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 Western Bulk Chartering, you can compare the effects of market volatilities on SeaBird Exploration and Western Bulk 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 Western Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of SeaBird Exploration and Western Bulk.
Diversification Opportunities for SeaBird Exploration and Western Bulk
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SeaBird and Western is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SeaBird Exploration Plc and Western Bulk Chartering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Bulk Chartering 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 Western Bulk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Bulk Chartering has no effect on the direction of SeaBird Exploration i.e., SeaBird Exploration and Western Bulk go up and down completely randomly.
Pair Corralation between SeaBird Exploration and Western Bulk
Assuming the 90 days trading horizon SeaBird Exploration Plc is expected to generate 0.63 times more return on investment than Western Bulk. However, SeaBird Exploration Plc is 1.59 times less risky than Western Bulk. It trades about 0.35 of its potential returns per unit of risk. Western Bulk Chartering is currently generating about -0.2 per unit of risk. If you would invest 505.00 in SeaBird Exploration Plc on August 27, 2024 and sell it today you would earn a total of 55.00 from holding SeaBird Exploration Plc or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SeaBird Exploration Plc vs. Western Bulk Chartering
Performance |
| Timeline |
| SeaBird Exploration Plc |
| Western Bulk Chartering |
SeaBird Exploration and Western Bulk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SeaBird Exploration and Western Bulk
The main advantage of trading using opposite SeaBird Exploration and Western Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SeaBird Exploration position performs unexpectedly, Western Bulk 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 Western Bulk will offset losses from the drop in Western Bulk's long position.| SeaBird Exploration vs. Subsea 7 SA | SeaBird Exploration vs. Aker ASA | SeaBird Exploration vs. Dno ASA | SeaBird Exploration vs. Aker Carbon Capture |
| Western Bulk vs. Shelf Drilling | Western Bulk vs. Solstad Offsho | Western Bulk vs. Eidesvik Offshore ASA | Western Bulk vs. Elkem ASA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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