Correlation Between WT OFFSHORE and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both WT OFFSHORE and Fortescue Metals 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 WT OFFSHORE and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT OFFSHORE and Fortescue Metals Group, you can compare the effects of market volatilities on WT OFFSHORE and Fortescue Metals 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 WT OFFSHORE with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT OFFSHORE and Fortescue Metals.
Diversification Opportunities for WT OFFSHORE and Fortescue Metals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UWV and Fortescue is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and WT OFFSHORE 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 WT OFFSHORE are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of WT OFFSHORE i.e., WT OFFSHORE and Fortescue Metals go up and down completely randomly.
Pair Corralation between WT OFFSHORE and Fortescue Metals
Assuming the 90 days trading horizon WT OFFSHORE is expected to generate 2.45 times more return on investment than Fortescue Metals. However, WT OFFSHORE is 2.45 times more volatile than Fortescue Metals Group. It trades about 0.02 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about 0.03 per unit of risk. If you would invest 155.00 in WT OFFSHORE on October 31, 2024 and sell it today you would earn a total of 0.00 from holding WT OFFSHORE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT OFFSHORE vs. Fortescue Metals Group
Performance |
| Timeline |
| WT OFFSHORE |
| Fortescue Metals |
WT OFFSHORE and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT OFFSHORE and Fortescue Metals
The main advantage of trading using opposite WT OFFSHORE and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| WT OFFSHORE vs. Perdoceo Education | WT OFFSHORE vs. CHINA EDUCATION GROUP | WT OFFSHORE vs. Grand Canyon Education | WT OFFSHORE vs. FIRST SHIP LEASE |
| Fortescue Metals vs. GRUPO CARSO A1 | Fortescue Metals vs. Australian Agricultural | Fortescue Metals vs. Carsales | Fortescue Metals vs. Daito Trust Construction |
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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