Correlation Between Butler National and BAB
Can any of the company-specific risk be diversified away by investing in both Butler National and BAB 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 Butler National and BAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Butler National Corp and BAB Inc, you can compare the effects of market volatilities on Butler National and BAB 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 Butler National with a short position of BAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butler National and BAB.
Diversification Opportunities for Butler National and BAB
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Butler and BAB is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Butler National Corp and BAB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAB Inc and Butler National 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 Butler National Corp are associated (or correlated) with BAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAB Inc has no effect on the direction of Butler National i.e., Butler National and BAB go up and down completely randomly.
Pair Corralation between Butler National and BAB
Given the investment horizon of 90 days Butler National Corp is expected to generate 0.69 times more return on investment than BAB. However, Butler National Corp is 1.45 times less risky than BAB. It trades about 0.13 of its potential returns per unit of risk. BAB Inc is currently generating about 0.05 per unit of risk. If you would invest 79.00 in Butler National Corp on November 3, 2024 and sell it today you would earn a total of 91.00 from holding Butler National Corp or generate 115.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.38% |
| Values | Daily Returns |
Butler National Corp vs. BAB Inc
Performance |
| Timeline |
| Butler National Corp |
| BAB Inc |
Butler National and BAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Butler National and BAB
The main advantage of trading using opposite Butler National and BAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butler National position performs unexpectedly, BAB 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 BAB will offset losses from the drop in BAB's long position.| Butler National vs. Ballistic Recovery Systems | Butler National vs. BAB Inc | Butler National vs. Optex Systems Holdings, | Butler National vs. Smith Midland Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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