Correlation Between BW OFFSHORE and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Uber Technologies 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 Uber Technologies 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 Uber Technologies, you can compare the effects of market volatilities on BW OFFSHORE and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Uber Technologies.
Diversification Opportunities for BW OFFSHORE and Uber Technologies
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XY81 and Uber is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Uber Technologies go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Uber Technologies
Assuming the 90 days trading horizon BW OFFSHORE is expected to generate 2.98 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, BW OFFSHORE LTD is 1.11 times less risky than Uber Technologies. It trades about 0.03 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,379 in Uber Technologies on September 23, 2024 and sell it today you would earn a total of 3,491 from holding Uber Technologies or generate 146.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. Uber Technologies
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Uber Technologies |
BW OFFSHORE and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Uber Technologies
The main advantage of trading using opposite BW OFFSHORE and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.| BW OFFSHORE vs. NorAm Drilling AS | BW OFFSHORE vs. Suntory Beverage Food | BW OFFSHORE vs. Monster Beverage Corp | BW OFFSHORE vs. Pentair plc |
| Uber Technologies vs. BW OFFSHORE LTD | Uber Technologies vs. Jacquet Metal Service | Uber Technologies vs. WT OFFSHORE | Uber Technologies vs. ADRIATIC METALS LS 013355 |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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