Correlation Between BW OFFSHORE and Diageo Plc
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Diageo Plc 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 Diageo Plc 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 Diageo plc, you can compare the effects of market volatilities on BW OFFSHORE and Diageo Plc 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 Diageo Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Diageo Plc.
Diversification Opportunities for BW OFFSHORE and Diageo Plc
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between XY81 and Diageo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Diageo plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo plc 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 Diageo Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo plc has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Diageo Plc go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Diageo Plc
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 1.73 times more return on investment than Diageo Plc. However, BW OFFSHORE is 1.73 times more volatile than Diageo plc. It trades about 0.03 of its potential returns per unit of risk. Diageo plc is currently generating about -0.05 per unit of risk. If you would invest 211.00 in BW OFFSHORE LTD on August 29, 2024 and sell it today you would earn a total of 33.00 from holding BW OFFSHORE LTD or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. Diageo plc
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Diageo plc |
BW OFFSHORE and Diageo Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Diageo Plc
The main advantage of trading using opposite BW OFFSHORE and Diageo Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Diageo Plc 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 Diageo Plc will offset losses from the drop in Diageo Plc's long position.| BW OFFSHORE vs. NOV Inc | BW OFFSHORE vs. Superior Plus Corp | BW OFFSHORE vs. NMI Holdings | BW OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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