Correlation Between BW Offshore and John Wiley

Can any of the company-specific risk be diversified away by investing in both BW Offshore and John Wiley 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 John Wiley 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 John Wiley Sons, you can compare the effects of market volatilities on BW Offshore and John Wiley 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 John Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and John Wiley.

Diversification Opportunities for BW Offshore and John Wiley

0.05

Correlation Coefficient

BW Offshore  John Wiley

Significant diversification

The 3 months correlation between BWOFY and John is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and John Wiley Sons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wiley Sons 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 John Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wiley Sons has no effect on the direction of BW Offshore i.e., BW Offshore and John Wiley go up and down completely randomly.

Pair Corralation between BW Offshore and John Wiley

Assuming the 90 days horizon BW Offshore is expected to generate 168.03 times less return on investment than John Wiley. But when comparing it to its historical volatility, BW Offshore Limited is 80.93 times less risky than John Wiley. It trades about 0.08 of its potential returns per unit of risk. John Wiley Sons is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,094  in John Wiley Sons on September 29, 2024 and sell it today you would earn a total of  312.00  from holding John Wiley Sons or generate 7.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.4%
Values	Daily Returns

BW Offshore Limited  vs.  John Wiley Sons

BW Offshore Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, BW Offshore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

John Wiley Sons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Wiley Sons has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BW Offshore and John Wiley

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

The idea behind BW Offshore Limited and John Wiley Sons 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.