Correlation Between BW OFFSHORE and Mitsubishi Materials
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Mitsubishi Materials 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 Mitsubishi Materials 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 Mitsubishi Materials, you can compare the effects of market volatilities on BW OFFSHORE and Mitsubishi Materials 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 Mitsubishi Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Mitsubishi Materials.
Diversification Opportunities for BW OFFSHORE and Mitsubishi Materials
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between XY81 and Mitsubishi is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Mitsubishi Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Materials 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 Mitsubishi Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Materials has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Mitsubishi Materials go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Mitsubishi Materials
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to under-perform the Mitsubishi Materials. In addition to that, BW OFFSHORE is 3.1 times more volatile than Mitsubishi Materials. It trades about -0.08 of its total potential returns per unit of risk. Mitsubishi Materials is currently generating about 0.06 per unit of volatility. If you would invest 1,480 in Mitsubishi Materials on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Mitsubishi Materials or generate 1.35% 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. Mitsubishi Materials
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Mitsubishi Materials |
BW OFFSHORE and Mitsubishi Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Mitsubishi Materials
The main advantage of trading using opposite BW OFFSHORE and Mitsubishi Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Mitsubishi Materials 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 Mitsubishi Materials will offset losses from the drop in Mitsubishi Materials' long position.| BW OFFSHORE vs. Tenaris SA | BW OFFSHORE vs. NOV Inc | BW OFFSHORE vs. Superior Plus Corp | BW OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
| Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc | Mitsubishi Materials vs. Apple Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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