Correlation Between Alabama Aircraft and BWX Technologies
Can any of the company-specific risk be diversified away by investing in both Alabama Aircraft and BWX 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 Alabama Aircraft and BWX Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alabama Aircraft Industries and BWX Technologies, you can compare the effects of market volatilities on Alabama Aircraft and BWX 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 Alabama Aircraft with a short position of BWX Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alabama Aircraft and BWX Technologies.
Diversification Opportunities for Alabama Aircraft and BWX Technologies
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alabama and BWX is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alabama Aircraft Industries and BWX Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BWX Technologies and Alabama Aircraft 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 Alabama Aircraft Industries are associated (or correlated) with BWX Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BWX Technologies has no effect on the direction of Alabama Aircraft i.e., Alabama Aircraft and BWX Technologies go up and down completely randomly.
Pair Corralation between Alabama Aircraft and BWX Technologies
Assuming the 90 days horizon Alabama Aircraft Industries is expected to under-perform the BWX Technologies. In addition to that, Alabama Aircraft is 9.21 times more volatile than BWX Technologies. It trades about -0.15 of its total potential returns per unit of risk. BWX Technologies is currently generating about 0.11 per unit of volatility. If you would invest 6,001 in BWX Technologies on August 24, 2024 and sell it today you would earn a total of 7,327 from holding BWX Technologies or generate 122.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 9.07% |
| Values | Daily Returns |
Alabama Aircraft Industries vs. BWX Technologies
Performance |
| Timeline |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BWX Technologies |
Alabama Aircraft and BWX Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alabama Aircraft and BWX Technologies
The main advantage of trading using opposite Alabama Aircraft and BWX Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alabama Aircraft position performs unexpectedly, BWX 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 BWX Technologies will offset losses from the drop in BWX Technologies' long position.| Alabama Aircraft vs. Universal | Alabama Aircraft vs. Diageo PLC ADR | Alabama Aircraft vs. Compania Cervecerias Unidas | Alabama Aircraft vs. Boston Beer |
| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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