Correlation Between WT Offshore and Bm Technologies

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

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

Diversification Opportunities for WT Offshore and Bm Technologies

-0.06

Correlation Coefficient

WT Offshore  Bm Technologies

Good diversification

The 3 months correlation between WTI and BMTX is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and Bm Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bm Technologies 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 Bm Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bm Technologies has no effect on the direction of WT Offshore i.e., WT Offshore and Bm Technologies go up and down completely randomly.

Pair Corralation between WT Offshore and Bm Technologies

Considering the 90-day investment horizon WT Offshore is expected to under-perform the Bm Technologies. But the stock apears to be less risky and, when comparing its historical volatility, WT Offshore is 6.41 times less risky than Bm Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The Bm Technologies is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  165.00  in Bm Technologies on February 22, 2024 and sell it today you would earn a total of  139.00  from holding Bm Technologies or generate 84.24% return on investment over 90 days.

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

WT Offshore  vs.  Bm Technologies

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Bm Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bm Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Bm Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WT Offshore and Bm Technologies

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

The idea behind WT Offshore and Bm Technologies 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.