Correlation Between BW Offshore and AdvancedAdvT
Can any of the company-specific risk be diversified away by investing in both BW Offshore and AdvancedAdvT 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 AdvancedAdvT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and AdvancedAdvT, you can compare the effects of market volatilities on BW Offshore and AdvancedAdvT 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 AdvancedAdvT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and AdvancedAdvT.
Diversification Opportunities for BW Offshore and AdvancedAdvT
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0RKH and AdvancedAdvT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and AdvancedAdvT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvancedAdvT 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 are associated (or correlated) with AdvancedAdvT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvancedAdvT has no effect on the direction of BW Offshore i.e., BW Offshore and AdvancedAdvT go up and down completely randomly.
Pair Corralation between BW Offshore and AdvancedAdvT
Assuming the 90 days trading horizon BW Offshore is expected to generate 1.07 times less return on investment than AdvancedAdvT. In addition to that, BW Offshore is 1.15 times more volatile than AdvancedAdvT. It trades about 0.18 of its total potential returns per unit of risk. AdvancedAdvT is currently generating about 0.22 per unit of volatility. If you would invest 15,000 in AdvancedAdvT on April 22, 2025 and sell it today you would earn a total of 3,950 from holding AdvancedAdvT or generate 26.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BW Offshore vs. AdvancedAdvT
Performance |
Timeline |
BW Offshore |
AdvancedAdvT |
BW Offshore and AdvancedAdvT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BW Offshore and AdvancedAdvT
The main advantage of trading using opposite BW Offshore and AdvancedAdvT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, AdvancedAdvT 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 AdvancedAdvT will offset losses from the drop in AdvancedAdvT's long position.BW Offshore vs. Fiinu PLC | BW Offshore vs. AFC Energy plc | BW Offshore vs. Argo Blockchain PLC | BW Offshore vs. SANTANDER UK 10 |
AdvancedAdvT vs. BW Offshore | AdvancedAdvT vs. Fidelity National Information | AdvancedAdvT vs. GlobalData PLC | AdvancedAdvT vs. Fevertree Drinks Plc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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