Correlation Between BW Offshore and Liontrust Asset

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

By analyzing existing cross correlation between BW Offshore and Liontrust Asset Management, you can compare the effects of market volatilities on BW Offshore and Liontrust Asset 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 Liontrust Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Liontrust Asset.

Diversification Opportunities for BW Offshore and Liontrust Asset

-0.16

Correlation Coefficient

BW Offshore  Liontrust Asset

Good diversification

The 3 months correlation between 0RKH and Liontrust is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana 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 Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of BW Offshore i.e., BW Offshore and Liontrust Asset go up and down completely randomly.

Pair Corralation between BW Offshore and Liontrust Asset

Assuming the 90 days trading horizon BW Offshore is expected to generate 0.89 times more return on investment than Liontrust Asset. However, BW Offshore is 1.13 times less risky than Liontrust Asset. It trades about 0.04 of its potential returns per unit of risk. Liontrust Asset Management is currently generating about -0.01 per unit of risk. If you would invest  2,258  in BW Offshore on September 30, 2024 and sell it today you would earn a total of  685.00  from holding BW Offshore or generate 30.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.13%
Values	Daily Returns

BW Offshore  vs.  Liontrust Asset Management

BW Offshore

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BW Offshore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Liontrust Asset Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BW Offshore and Liontrust Asset

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

The idea behind BW Offshore and Liontrust Asset Management 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.