Correlation Between BW OFFSHORE and United Utilities
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on BW OFFSHORE and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and United Utilities.
Diversification Opportunities for BW OFFSHORE and United Utilities
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between XY81 and United is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and United Utilities go up and down completely randomly.
Pair Corralation between BW OFFSHORE and United Utilities
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 0.9 times more return on investment than United Utilities. However, BW OFFSHORE LTD is 1.12 times less risky than United Utilities. It trades about 0.11 of its potential returns per unit of risk. United Utilities Group is currently generating about -0.13 per unit of risk. If you would invest 246.00 in BW OFFSHORE LTD on October 31, 2024 and sell it today you would earn a total of 11.00 from holding BW OFFSHORE LTD or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. United Utilities Group
Performance |
| Timeline |
| BW OFFSHORE LTD |
| United Utilities |
BW OFFSHORE and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and United Utilities
The main advantage of trading using opposite BW OFFSHORE and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| BW OFFSHORE vs. Chunghwa Telecom Co | BW OFFSHORE vs. QINGCI GAMES INC | BW OFFSHORE vs. GAMESTOP | BW OFFSHORE vs. Zoom Video Communications |
| United Utilities vs. North American Construction | United Utilities vs. G III Apparel Group | United Utilities vs. Urban Outfitters | United Utilities vs. DAIRY FARM INTL |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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