Correlation Between Sterling Construction and WT OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Sterling Construction and WT 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 Sterling Construction and WT OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and WT OFFSHORE, you can compare the effects of market volatilities on Sterling Construction and WT 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 Sterling Construction with a short position of WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and WT OFFSHORE.
Diversification Opportunities for Sterling Construction and WT OFFSHORE
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sterling and UWV is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE and Sterling Construction 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 Sterling Construction are associated (or correlated) with WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of Sterling Construction i.e., Sterling Construction and WT OFFSHORE go up and down completely randomly.
Pair Corralation between Sterling Construction and WT OFFSHORE
Assuming the 90 days horizon Sterling Construction is expected to generate 1.45 times more return on investment than WT OFFSHORE. However, Sterling Construction is 1.45 times more volatile than WT OFFSHORE. It trades about 0.3 of its potential returns per unit of risk. WT OFFSHORE is currently generating about -0.12 per unit of risk. If you would invest 13,880 in Sterling Construction on September 4, 2024 and sell it today you would earn a total of 4,430 from holding Sterling Construction or generate 31.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sterling Construction vs. WT OFFSHORE
Performance |
| Timeline |
| Sterling Construction |
| WT OFFSHORE |
Sterling Construction and WT OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and WT OFFSHORE
The main advantage of trading using opposite Sterling Construction and WT OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction position performs unexpectedly, WT 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 WT OFFSHORE will offset losses from the drop in WT OFFSHORE's long position.| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. China Railway Group | Sterling Construction vs. China Communications Construction | Sterling Construction vs. Superior Plus Corp |
| WT OFFSHORE vs. TOTAL GABON | WT OFFSHORE vs. Walgreens Boots Alliance | WT OFFSHORE vs. Peak Resources Limited |
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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