Correlation Between WT OFFSHORE and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both WT OFFSHORE and Sterling Construction 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 Sterling Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT OFFSHORE and Sterling Construction, you can compare the effects of market volatilities on WT OFFSHORE and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT OFFSHORE and Sterling Construction.
Diversification Opportunities for WT OFFSHORE and Sterling Construction
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between UWV and Sterling is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of WT OFFSHORE i.e., WT OFFSHORE and Sterling Construction go up and down completely randomly.
Pair Corralation between WT OFFSHORE and Sterling Construction
Assuming the 90 days trading horizon WT OFFSHORE is expected to under-perform the Sterling Construction. But the stock apears to be less risky and, when comparing its historical volatility, WT OFFSHORE is 1.04 times less risky than Sterling Construction. The stock trades about -0.04 of its potential returns per unit of risk. The Sterling Construction is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,500 in Sterling Construction on September 4, 2024 and sell it today you would earn a total of 11,810 from holding Sterling Construction or generate 181.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
WT OFFSHORE vs. Sterling Construction
Performance |
| Timeline |
| WT OFFSHORE |
| Sterling Construction |
WT OFFSHORE and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT OFFSHORE and Sterling Construction
The main advantage of trading using opposite WT OFFSHORE and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| WT OFFSHORE vs. TOTAL GABON | WT OFFSHORE vs. Walgreens Boots Alliance | WT OFFSHORE vs. Peak Resources Limited |
| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. China Railway Group | Sterling Construction vs. China Communications Construction | Sterling Construction vs. Superior Plus Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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