Correlation Between Stabilis Solutions and BP PLC
Can any of the company-specific risk be diversified away by investing in both Stabilis Solutions and BP PLC 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 Stabilis Solutions and BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stabilis Solutions and BP PLC ADR, you can compare the effects of market volatilities on Stabilis Solutions and BP PLC 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 Stabilis Solutions with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stabilis Solutions and BP PLC.
Diversification Opportunities for Stabilis Solutions and BP PLC
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stabilis and BP PLC is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Stabilis Solutions and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR and Stabilis Solutions 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 Stabilis Solutions are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Stabilis Solutions i.e., Stabilis Solutions and BP PLC go up and down completely randomly.
Pair Corralation between Stabilis Solutions and BP PLC
Given the investment horizon of 90 days Stabilis Solutions is expected to generate 2.47 times more return on investment than BP PLC. However, Stabilis Solutions is 2.47 times more volatile than BP PLC ADR. It trades about 0.11 of its potential returns per unit of risk. BP PLC ADR is currently generating about -0.07 per unit of risk. If you would invest 458.00 in Stabilis Solutions on August 27, 2024 and sell it today you would earn a total of 40.00 from holding Stabilis Solutions or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stabilis Solutions vs. BP PLC ADR
Performance |
| Timeline |
| Stabilis Solutions |
| BP PLC ADR |
Stabilis Solutions and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stabilis Solutions and BP PLC
The main advantage of trading using opposite Stabilis Solutions and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stabilis Solutions position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Stabilis Solutions vs. Equinor ASA ADR | Stabilis Solutions vs. TotalEnergies SE ADR | Stabilis Solutions vs. Ecopetrol SA ADR | Stabilis Solutions vs. National Fuel Gas |
| BP PLC vs. TotalEnergies SE ADR | BP PLC vs. Chevron Corp | BP PLC vs. Exxon Mobil Corp | BP PLC vs. Equinor ASA ADR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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