Correlation Between BW OFFSHORE and Nucor
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Nucor 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 Nucor 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 Nucor, you can compare the effects of market volatilities on BW OFFSHORE and Nucor 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 Nucor. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Nucor.
Diversification Opportunities for BW OFFSHORE and Nucor
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XY81 and Nucor is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Nucor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor 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 Nucor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Nucor go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Nucor
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to under-perform the Nucor. But the stock apears to be less risky and, when comparing its historical volatility, BW OFFSHORE LTD is 1.04 times less risky than Nucor. The stock trades about -0.01 of its potential returns per unit of risk. The Nucor is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 14,836 in Nucor on September 2, 2024 and sell it today you would lose (342.00) from holding Nucor or give up 2.31% 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. Nucor
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Nucor |
BW OFFSHORE and Nucor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Nucor
The main advantage of trading using opposite BW OFFSHORE and Nucor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Nucor 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 Nucor will offset losses from the drop in Nucor's long position.| BW OFFSHORE vs. Superior Plus Corp | BW OFFSHORE vs. NMI Holdings | BW OFFSHORE vs. Origin Agritech | 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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