Correlation Between Babcock International and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both Babcock International and Balfour Beatty 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 Balfour Beatty 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 Balfour Beatty PLC, you can compare the effects of market volatilities on Babcock International and Balfour Beatty 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 Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock International and Balfour Beatty.
Diversification Opportunities for Babcock International and Balfour Beatty
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and Balfour is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Babcock International Group and Balfour Beatty PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty PLC 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 Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty PLC has no effect on the direction of Babcock International i.e., Babcock International and Balfour Beatty go up and down completely randomly.
Pair Corralation between Babcock International and Balfour Beatty
If you would invest 595.00 in Babcock International Group on August 31, 2024 and sell it today you would earn a total of 63.00 from holding Babcock International Group or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Babcock International Group vs. Balfour Beatty PLC
Performance |
| Timeline |
| Babcock International |
| Balfour Beatty PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Babcock International and Balfour Beatty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock International and Balfour Beatty
The main advantage of trading using opposite Babcock International and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock International position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.| Babcock International vs. Orion Group Holdings | Babcock International vs. Agrify Corp | Babcock International vs. Matrix Service Co | Babcock International vs. MYR Group |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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