Correlation Between WT Offshore and Freedom Bank

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

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

Diversification Opportunities for WT Offshore and Freedom Bank

0.16

Correlation Coefficient

WT Offshore  Freedom Bank

Average diversification

The 3 months correlation between WTI and Freedom is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and WT 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 WT Offshore are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of WT Offshore i.e., WT Offshore and Freedom Bank go up and down completely randomly.

Pair Corralation between WT Offshore and Freedom Bank

Considering the 90-day investment horizon WT Offshore is expected to under-perform the Freedom Bank. In addition to that, WT Offshore is 2.62 times more volatile than Freedom Bank of. It trades about -0.06 of its total potential returns per unit of risk. Freedom Bank of is currently generating about -0.06 per unit of volatility. If you would invest  1,440  in Freedom Bank of on October 15, 2024 and sell it today you would lose (415.00) from holding Freedom Bank of or give up 28.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.02%
Values	Daily Returns

WT Offshore  vs.  Freedom Bank of

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Freedom Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freedom Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WT Offshore and Freedom Bank

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

The idea behind WT Offshore and Freedom Bank of 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 Stocks Directory module to find actively traded stocks across global markets.