Correlation Between BW OFFSHORE and Seven West
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Seven West 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 Seven West 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 Seven West Media, you can compare the effects of market volatilities on BW OFFSHORE and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Seven West.
Diversification Opportunities for BW OFFSHORE and Seven West
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XY81 and Seven is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Seven West go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Seven West
Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 0.55 times more return on investment than Seven West. However, BW OFFSHORE LTD is 1.83 times less risky than Seven West. It trades about 0.04 of its potential returns per unit of risk. Seven West Media is currently generating about -0.04 per unit of risk. If you would invest 193.00 in BW OFFSHORE LTD on October 17, 2024 and sell it today you would earn a total of 69.00 from holding BW OFFSHORE LTD or generate 35.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
BW OFFSHORE LTD vs. Seven West Media
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Seven West Media |
BW OFFSHORE and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Seven West
The main advantage of trading using opposite BW OFFSHORE and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.| BW OFFSHORE vs. BANKINTER ADR 2007 | BW OFFSHORE vs. Perdoceo Education | BW OFFSHORE vs. CeoTronics AG | BW OFFSHORE vs. UNIQA INSURANCE GR |
| Seven West vs. CITIC Telecom International | Seven West vs. BW OFFSHORE LTD | Seven West vs. WT OFFSHORE | Seven West vs. Comba Telecom Systems |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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