Correlation Between BCB Bancorp and WT Offshore

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

By analyzing existing cross correlation between BCB Bancorp and WT Offshore, you can compare the effects of market volatilities on BCB Bancorp and WT Offshore 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 BCB Bancorp with a short position of WT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCB Bancorp and WT Offshore.

Diversification Opportunities for BCB Bancorp and WT Offshore

-0.38

Correlation Coefficient

BCB Bancorp  WT Offshore

Very good diversification

The 3 months correlation between BCB and WTI is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BCB Bancorp and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore and BCB Bancorp 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 BCB Bancorp are associated (or correlated) with WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of BCB Bancorp i.e., BCB Bancorp and WT Offshore go up and down completely randomly.

Pair Corralation between BCB Bancorp and WT Offshore

Given the investment horizon of 90 days BCB Bancorp is expected to generate 0.57 times more return on investment than WT Offshore. However, BCB Bancorp is 1.75 times less risky than WT Offshore. It trades about 0.2 of its potential returns per unit of risk. WT Offshore is currently generating about -0.13 per unit of risk. If you would invest  1,186  in BCB Bancorp on September 5, 2024 and sell it today you would earn a total of  111.00  from holding BCB Bancorp or generate 9.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BCB Bancorp  vs.  WT Offshore

BCB Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BCB Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, BCB Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WT Offshore is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BCB Bancorp and WT Offshore

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

The idea behind BCB Bancorp and WT Offshore 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.