Correlation Between Wheaton Precious and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and BW Offshore, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and BW Offshore.
Diversification Opportunities for Wheaton Precious and BW Offshore
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wheaton and 0RKH is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore and Wheaton Precious 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 Wheaton Precious Metals 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 has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and BW Offshore go up and down completely randomly.
Pair Corralation between Wheaton Precious and BW Offshore
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to under-perform the BW Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Wheaton Precious Metals is 1.61 times less risky than BW Offshore. The stock trades about -0.1 of its potential returns per unit of risk. The BW Offshore is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,901 in BW Offshore on September 1, 2024 and sell it today you would lose (113.00) from holding BW Offshore or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. BW Offshore
Performance |
| Timeline |
| Wheaton Precious Metals |
| BW Offshore |
Wheaton Precious and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and BW Offshore
The main advantage of trading using opposite Wheaton Precious and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.| Wheaton Precious vs. Schroders Investment Trusts | Wheaton Precious vs. FC Investment Trust | Wheaton Precious vs. Hansa Investment | Wheaton Precious vs. Sligro Food Group |
| BW Offshore vs. Microchip Technology | BW Offshore vs. Cizzle Biotechnology Holdings | BW Offshore vs. Advanced Medical Solutions | BW Offshore vs. Allianz Technology Trust |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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