Correlation Between Unum and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Unum 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 Unum and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unum Group and BW Offshore Limited, you can compare the effects of market volatilities on Unum 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 Unum with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unum and BW Offshore.
Diversification Opportunities for Unum and BW Offshore
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unum and BWOFY is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Unum Group 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 Unum 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 Unum Group 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 Unum i.e., Unum and BW Offshore go up and down completely randomly.
Pair Corralation between Unum and BW Offshore
Considering the 90-day investment horizon Unum Group is expected to generate 0.59 times more return on investment than BW Offshore. However, Unum Group is 1.68 times less risky than BW Offshore. It trades about -0.03 of its potential returns per unit of risk. BW Offshore Limited is currently generating about -0.11 per unit of risk. If you would invest 7,584 in Unum Group on October 23, 2024 and sell it today you would lose (86.00) from holding Unum Group or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unum Group vs. BW Offshore Limited
Performance |
| Timeline |
| Unum Group |
| BW Offshore Limited |
Unum and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unum and BW Offshore
The main advantage of trading using opposite Unum and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unum 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.| Unum vs. Prudential Financial | Unum vs. MetLife | Unum vs. Jackson Financial | Unum vs. Manulife Financial Corp |
| BW Offshore vs. FG Annuities Life | BW Offshore vs. Aterian | BW Offshore vs. Sun Country Airlines | BW Offshore vs. Cincinnati Financial |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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