Correlation Between WT Offshore and Loews Corp
Can any of the company-specific risk be diversified away by investing in both WT Offshore and Loews Corp 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 Loews Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT Offshore and Loews Corp, you can compare the effects of market volatilities on WT Offshore and Loews Corp 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 Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Offshore and Loews Corp.
Diversification Opportunities for WT Offshore and Loews Corp
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WTI and Loews is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of WT Offshore i.e., WT Offshore and Loews Corp go up and down completely randomly.
Pair Corralation between WT Offshore and Loews Corp
Considering the 90-day investment horizon WT Offshore is expected to under-perform the Loews Corp. In addition to that, WT Offshore is 3.17 times more volatile than Loews Corp. It trades about -0.03 of its total potential returns per unit of risk. Loews Corp is currently generating about 0.01 per unit of volatility. If you would invest 8,601 in Loews Corp on October 23, 2024 and sell it today you would earn a total of 24.00 from holding Loews Corp or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT Offshore vs. Loews Corp
Performance |
| Timeline |
| WT Offshore |
| Loews Corp |
WT Offshore and Loews Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT Offshore and Loews Corp
The main advantage of trading using opposite WT Offshore and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore position performs unexpectedly, Loews Corp 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 Loews Corp will offset losses from the drop in Loews Corp's long position.| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. Permian Resources |
| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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