Correlation Between Badger Infrastructure and Babcock International
Can any of the company-specific risk be diversified away by investing in both Badger Infrastructure and Babcock International 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 Badger Infrastructure and Babcock International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Badger Infrastructure Solutions and Babcock International Group, you can compare the effects of market volatilities on Badger Infrastructure and Babcock International 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 Badger Infrastructure with a short position of Babcock International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Badger Infrastructure and Babcock International.
Diversification Opportunities for Badger Infrastructure and Babcock International
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Badger and Babcock is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Badger Infrastructure Solution and Babcock International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock International and Badger Infrastructure 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 Badger Infrastructure Solutions are associated (or correlated) with Babcock International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock International has no effect on the direction of Badger Infrastructure i.e., Badger Infrastructure and Babcock International go up and down completely randomly.
Pair Corralation between Badger Infrastructure and Babcock International
Assuming the 90 days horizon Badger Infrastructure Solutions is expected to under-perform the Babcock International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Badger Infrastructure Solutions is 1.39 times less risky than Babcock International. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Babcock International Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 594.00 in Babcock International Group on August 28, 2024 and sell it today you would earn a total of 64.00 from holding Babcock International Group or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Badger Infrastructure Solution vs. Babcock International Group
Performance |
| Timeline |
| Badger Infrastructure |
| Babcock International |
Badger Infrastructure and Babcock International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Badger Infrastructure and Babcock International
The main advantage of trading using opposite Badger Infrastructure and Babcock International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Badger Infrastructure position performs unexpectedly, Babcock International 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 Babcock International will offset losses from the drop in Babcock International's long position.| Badger Infrastructure vs. Element Solutions | Badger Infrastructure vs. Orion Engineered Carbons | Badger Infrastructure vs. Minerals Technologies | Badger Infrastructure vs. Ingevity Corp |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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