Correlation Between WT Offshore and LENSAR
Can any of the company-specific risk be diversified away by investing in both WT Offshore and LENSAR 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 LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT Offshore and LENSAR Inc, you can compare the effects of market volatilities on WT Offshore and LENSAR 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 LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Offshore and LENSAR.
Diversification Opportunities for WT Offshore and LENSAR
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WTI and LENSAR is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc 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 LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of WT Offshore i.e., WT Offshore and LENSAR go up and down completely randomly.
Pair Corralation between WT Offshore and LENSAR
Considering the 90-day investment horizon WT Offshore is expected to under-perform the LENSAR. But the stock apears to be less risky and, when comparing its historical volatility, WT Offshore is 1.66 times less risky than LENSAR. The stock trades about -0.04 of its potential returns per unit of risk. The LENSAR Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 226.00 in LENSAR Inc on September 4, 2024 and sell it today you would earn a total of 544.00 from holding LENSAR Inc or generate 240.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT Offshore vs. LENSAR Inc
Performance |
| Timeline |
| WT Offshore |
| LENSAR Inc |
WT Offshore and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT Offshore and LENSAR
The main advantage of trading using opposite WT Offshore and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR's long position.| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. PEDEVCO 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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