Correlation Between BW OFFSHORE and BHP Group
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and BHP Group 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 BHP Group 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 BHP Group Limited, you can compare the effects of market volatilities on BW OFFSHORE and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and BHP Group.
Diversification Opportunities for BW OFFSHORE and BHP Group
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XY81 and BHP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and BHP Group go up and down completely randomly.
Pair Corralation between BW OFFSHORE and BHP Group
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to under-perform the BHP Group. In addition to that, BW OFFSHORE is 2.8 times more volatile than BHP Group Limited. It trades about -0.05 of its total potential returns per unit of risk. BHP Group Limited is currently generating about -0.01 per unit of volatility. If you would invest 4,890 in BHP Group Limited on September 15, 2024 and sell it today you would lose (20.00) from holding BHP Group Limited or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. BHP Group Limited
Performance |
| Timeline |
| BW OFFSHORE LTD |
| BHP Group Limited |
BW OFFSHORE and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and BHP Group
The main advantage of trading using opposite BW OFFSHORE and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| BW OFFSHORE vs. Tenaris SA | BW OFFSHORE vs. NOV Inc | BW OFFSHORE vs. Superior Plus Corp | BW OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
| BHP Group vs. BRIT AMER TOBACCO | BHP Group vs. United Internet AG | BHP Group vs. Scandinavian Tobacco Group | BHP Group vs. BW OFFSHORE LTD |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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