Correlation Between BW Energy and Var Energi

Can any of the company-specific risk be diversified away by investing in both BW Energy and Var Energi 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 Energy and Var Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BW Energy and Var Energi ASA, you can compare the effects of market volatilities on BW Energy and Var Energi 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 Energy with a short position of Var Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Energy and Var Energi.

Diversification Opportunities for BW Energy and Var Energi

0.92

Correlation Coefficient

BW Energy  Var Energi

Almost no diversification

The 3 months correlation between BWE and Var is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding BW Energy and Var Energi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Var Energi ASA and BW Energy 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 Energy are associated (or correlated) with Var Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Var Energi ASA has no effect on the direction of BW Energy i.e., BW Energy and Var Energi go up and down completely randomly.

Pair Corralation between BW Energy and Var Energi

Assuming the 90 days trading horizon BW Energy is expected to generate 1.56 times more return on investment than Var Energi. However, BW Energy is 1.56 times more volatile than Var Energi ASA. It trades about 0.18 of its potential returns per unit of risk. Var Energi ASA is currently generating about 0.19 per unit of risk. If you would invest  2,710  in BW Energy on April 22, 2025 and sell it today you would earn a total of  810.00  from holding BW Energy or generate 29.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

BW Energy  vs.  Var Energi ASA

BW Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BW Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, BW Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Var Energi ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Var Energi ASA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Var Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BW Energy and Var Energi

The main advantage of trading using opposite BW Energy and Var Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Energy position performs unexpectedly, Var Energi 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 Var Energi will offset losses from the drop in Var Energi's long position.

The idea behind BW Energy and Var Energi ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.