Correlation Between Envista Holdings and BW Offshore

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

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

Diversification Opportunities for Envista Holdings and BW Offshore

0.43

Correlation Coefficient

Envista Holdings  BW Offshore

Very weak diversification

The 3 months correlation between Envista and BWOFY is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Envista Holdings Corp and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited and Envista Holdings 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 Envista Holdings Corp are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of Envista Holdings i.e., Envista Holdings and BW Offshore go up and down completely randomly.

Pair Corralation between Envista Holdings and BW Offshore

Given the investment horizon of 90 days Envista Holdings Corp is expected to under-perform the BW Offshore. In addition to that, Envista Holdings is 1.48 times more volatile than BW Offshore Limited. It trades about -0.02 of its total potential returns per unit of risk. BW Offshore Limited is currently generating about 0.07 per unit of volatility. If you would invest  433.00  in BW Offshore Limited on October 9, 2024 and sell it today you would earn a total of  122.00  from holding BW Offshore Limited or generate 28.18% return on investment over 90 days.

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

Envista Holdings Corp  vs.  BW Offshore Limited

Envista Holdings Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Envista Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Envista Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 February 2025.

Pair Trading with Envista Holdings and BW Offshore

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

The idea behind Envista Holdings Corp and BW Offshore Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.