Correlation Between BW Energy and 2020 Bulkers

Can any of the company-specific risk be diversified away by investing in both BW Energy and 2020 Bulkers 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 Energy and 2020 Bulkers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BW Energy and 2020 Bulkers, you can compare the effects of market volatilities on BW Energy and 2020 Bulkers 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 Energy with a short position of 2020 Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Energy and 2020 Bulkers.

Diversification Opportunities for BW Energy and 2020 Bulkers

0.0

Correlation Coefficient

BW Energy  2020 Bulkers

Pay attention - limited upside

The 3 months correlation between BWE and 2020 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BW Energy and 2020 Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2020 Bulkers and BW Energy 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 Energy are associated (or correlated) with 2020 Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2020 Bulkers has no effect on the direction of BW Energy i.e., BW Energy and 2020 Bulkers go up and down completely randomly.

Pair Corralation between BW Energy and 2020 Bulkers

Assuming the 90 days trading horizon BW Energy is expected to generate 0.77 times more return on investment than 2020 Bulkers. However, BW Energy is 1.3 times less risky than 2020 Bulkers. It trades about 0.13 of its potential returns per unit of risk. 2020 Bulkers is currently generating about -0.08 per unit of risk. If you would invest  2,235  in BW Energy on November 20, 2024 and sell it today you would earn a total of  295.00  from holding BW Energy or generate 13.2% return on investment over 90 days.

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

BW Energy  vs.  2020 Bulkers

BW Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BW Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, BW Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

2020 Bulkers

Risk-Adjusted Performance

Very Weak

Over the last 90 days 2020 Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with BW Energy and 2020 Bulkers

The main advantage of trading using opposite BW Energy and 2020 Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Energy position performs unexpectedly, 2020 Bulkers 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 2020 Bulkers will offset losses from the drop in 2020 Bulkers' long position.

The idea behind BW Energy and 2020 Bulkers 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.