Correlation Between BW OFFSHORE and GREEN PLAINS

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

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

Diversification Opportunities for BW OFFSHORE and GREEN PLAINS

-0.38

Correlation Coefficient

BW OFFSHORE  GREEN PLAINS

Very good diversification

The 3 months correlation between XY81 and GREEN is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BW OFFSHORE LTD and GREEN PLAINS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREEN PLAINS 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 LTD are associated (or correlated) with GREEN PLAINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREEN PLAINS has no effect on the direction of BW OFFSHORE i.e., BW OFFSHORE and GREEN PLAINS go up and down completely randomly.

Pair Corralation between BW OFFSHORE and GREEN PLAINS

Assuming the 90 days trading horizon BW OFFSHORE LTD is expected to generate 0.45 times more return on investment than GREEN PLAINS. However, BW OFFSHORE LTD is 2.21 times less risky than GREEN PLAINS. It trades about 0.11 of its potential returns per unit of risk. GREEN PLAINS is currently generating about -0.18 per unit of risk. If you would invest  218.00  in BW OFFSHORE LTD on December 21, 2024 and sell it today you would earn a total of  31.00  from holding BW OFFSHORE LTD or generate 14.22% return on investment over 90 days.

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

BW OFFSHORE LTD  vs.  GREEN PLAINS

BW OFFSHORE LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BW OFFSHORE LTD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BW OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

GREEN PLAINS

Risk-Adjusted Performance

Very Weak

Over the last 90 days GREEN PLAINS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BW OFFSHORE and GREEN PLAINS

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

The idea behind BW OFFSHORE LTD and GREEN PLAINS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.