Correlation Between BW OFFSHORE and BC IRON
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and BC IRON 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 BW OFFSHORE and BC IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW OFFSHORE LTD and BC IRON, you can compare the effects of market volatilities on BW OFFSHORE and BC IRON 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 BW OFFSHORE with a short position of BC IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and BC IRON.
Diversification Opportunities for BW OFFSHORE and BC IRON
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XY81 and BC3 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON and BW 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 BW OFFSHORE LTD are associated (or correlated) with BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and BC IRON go up and down completely randomly.
Pair Corralation between BW OFFSHORE and BC IRON
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 0.83 times more return on investment than BC IRON. However, BW OFFSHORE LTD is 1.21 times less risky than BC IRON. It trades about 0.34 of its potential returns per unit of risk. BC IRON is currently generating about 0.15 per unit of risk. If you would invest 230.00 in BW OFFSHORE LTD on October 16, 2024 and sell it today you would earn a total of 32.00 from holding BW OFFSHORE LTD or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. BC IRON
Performance |
| Timeline |
| BW OFFSHORE LTD |
| BC IRON |
BW OFFSHORE and BC IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and BC IRON
The main advantage of trading using opposite BW OFFSHORE and BC IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, BC IRON 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 BC IRON will offset losses from the drop in BC IRON's long position.| BW OFFSHORE vs. GREENX METALS LTD | BW OFFSHORE vs. FORWARD AIR P | BW OFFSHORE vs. Ryanair Holdings plc | BW OFFSHORE vs. Jacquet Metal Service |
| BC IRON vs. BW OFFSHORE LTD | BC IRON vs. Gold Road Resources | BC IRON vs. Texas Roadhouse | BC IRON vs. Broadridge Financial Solutions |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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