Correlation Between BW OFFSHORE and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both BW OFFSHORE and Evolution Mining 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 Evolution Mining 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 Evolution Mining Limited, you can compare the effects of market volatilities on BW OFFSHORE and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW OFFSHORE and Evolution Mining.
Diversification Opportunities for BW OFFSHORE and Evolution Mining
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XY81 and Evolution is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and Evolution Mining go up and down completely randomly.
Pair Corralation between BW OFFSHORE and Evolution Mining
Assuming the 90 days trading horizon BW OFFSHORE is expected to generate 1.65 times less return on investment than Evolution Mining. But when comparing it to its historical volatility, BW OFFSHORE LTD is 1.15 times less risky than Evolution Mining. It trades about 0.03 of its potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 185.00 in Evolution Mining Limited on August 30, 2024 and sell it today you would earn a total of 118.00 from holding Evolution Mining Limited or generate 63.78% 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. Evolution Mining Limited
Performance |
| Timeline |
| BW OFFSHORE LTD |
| Evolution Mining |
BW OFFSHORE and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW OFFSHORE and Evolution Mining
The main advantage of trading using opposite BW OFFSHORE and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW OFFSHORE position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.| BW OFFSHORE vs. NOV Inc | BW OFFSHORE vs. Superior Plus Corp | BW OFFSHORE vs. NMI Holdings | BW OFFSHORE vs. SIVERS SEMICONDUCTORS AB |
| Evolution Mining vs. Franco Nevada | Evolution Mining vs. Wheaton Precious Metals | Evolution Mining vs. Superior Plus Corp | Evolution Mining vs. NMI Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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