Correlation Between BW Offshore and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Nabors Industries 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 Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore Limited and Nabors Industries, you can compare the effects of market volatilities on BW Offshore and Nabors Industries 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 Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Nabors Industries.
Diversification Opportunities for BW Offshore and Nabors Industries
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BWOFY and Nabors is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries 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 Limited are associated (or correlated) with Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of BW Offshore i.e., BW Offshore and Nabors Industries go up and down completely randomly.
Pair Corralation between BW Offshore and Nabors Industries
Assuming the 90 days horizon BW Offshore Limited is expected to generate 0.56 times more return on investment than Nabors Industries. However, BW Offshore Limited is 1.77 times less risky than Nabors Industries. It trades about 0.0 of its potential returns per unit of risk. Nabors Industries is currently generating about -0.1 per unit of risk. If you would invest 560.00 in BW Offshore Limited on September 24, 2024 and sell it today you would lose (5.00) from holding BW Offshore Limited or give up 0.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.46% |
Values | Daily Returns |
BW Offshore Limited vs. Nabors Industries
Performance |
Timeline |
BW Offshore Limited |
Nabors Industries |
BW Offshore and Nabors Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BW Offshore and Nabors Industries
The main advantage of trading using opposite BW Offshore and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Nabors Industries 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 Nabors Industries will offset losses from the drop in Nabors Industries' long position.BW Offshore vs. JetBlue Airways Corp | BW Offshore vs. Delta Air Lines | BW Offshore vs. Sligro Food Group | BW Offshore vs. Alaska Air Group |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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