Correlation Between BW Offshore and Iron Mountain

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

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

Diversification Opportunities for BW Offshore and Iron Mountain

0.39

Correlation Coefficient

BW Offshore  Iron Mountain

Weak diversification

The 3 months correlation between 0RKH and Iron is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of BW Offshore i.e., BW Offshore and Iron Mountain go up and down completely randomly.

Pair Corralation between BW Offshore and Iron Mountain

Assuming the 90 days trading horizon BW Offshore is expected to generate 3.23 times less return on investment than Iron Mountain. In addition to that, BW Offshore is 1.29 times more volatile than Iron Mountain. It trades about 0.02 of its total potential returns per unit of risk. Iron Mountain is currently generating about 0.06 per unit of volatility. If you would invest  9,161  in Iron Mountain on October 4, 2024 and sell it today you would earn a total of  1,240  from holding Iron Mountain or generate 13.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.43%
Values	Daily Returns

BW Offshore  vs.  Iron Mountain

BW Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BW Offshore is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BW Offshore and Iron Mountain

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

The idea behind BW Offshore and Iron Mountain 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.