Correlation Between Babcock International and Aecon
Can any of the company-specific risk be diversified away by investing in both Babcock International and Aecon 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 Babcock International and Aecon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock International Group and Aecon Group, you can compare the effects of market volatilities on Babcock International and Aecon 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 Babcock International with a short position of Aecon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock International and Aecon.
Diversification Opportunities for Babcock International and Aecon
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Babcock and Aecon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Babcock International Group and Aecon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecon Group and Babcock International 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 Babcock International Group are associated (or correlated) with Aecon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecon Group has no effect on the direction of Babcock International i.e., Babcock International and Aecon go up and down completely randomly.
Pair Corralation between Babcock International and Aecon
Assuming the 90 days horizon Babcock International is expected to generate 2.73 times less return on investment than Aecon. In addition to that, Babcock International is 1.38 times more volatile than Aecon Group. It trades about 0.03 of its total potential returns per unit of risk. Aecon Group is currently generating about 0.12 per unit of volatility. If you would invest 1,168 in Aecon Group on November 3, 2024 and sell it today you would earn a total of 474.00 from holding Aecon Group or generate 40.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock International Group vs. Aecon Group
Performance |
| Timeline |
| Babcock International |
| Aecon Group |
Babcock International and Aecon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock International and Aecon
The main advantage of trading using opposite Babcock International and Aecon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock International position performs unexpectedly, Aecon 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 Aecon will offset losses from the drop in Aecon's long position.| Babcock International vs. ACS Actividades De | Babcock International vs. Arcadis NV | Babcock International vs. Badger Infrastructure Solutions | Babcock International vs. Acciona SA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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