Correlation Between WT Offshore and BBB Foods
Can any of the company-specific risk be diversified away by investing in both WT Offshore and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT Offshore and BBB Foods, you can compare the effects of market volatilities on WT Offshore and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Offshore and BBB Foods.
Diversification Opportunities for WT Offshore and BBB Foods
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WTI and BBB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of WT Offshore i.e., WT Offshore and BBB Foods go up and down completely randomly.
Pair Corralation between WT Offshore and BBB Foods
Considering the 90-day investment horizon WT Offshore is expected to under-perform the BBB Foods. In addition to that, WT Offshore is 1.22 times more volatile than BBB Foods. It trades about -0.22 of its total potential returns per unit of risk. BBB Foods is currently generating about -0.06 per unit of volatility. If you would invest 3,236 in BBB Foods on September 23, 2024 and sell it today you would lose (291.00) from holding BBB Foods or give up 8.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT Offshore vs. BBB Foods
Performance |
| Timeline |
| WT Offshore |
| BBB Foods |
WT Offshore and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT Offshore and BBB Foods
The main advantage of trading using opposite WT Offshore and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. Permian Resources |
| BBB Foods vs. Ryanair Holdings PLC | BBB Foods vs. Azul SA | BBB Foods vs. Stepstone Group | BBB Foods vs. Northstar Clean Technologies |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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