Correlation Between Babcock Wilcox and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Alta Equipment 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 Wilcox and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock Wilcox Enterprises and Alta Equipment Group, you can compare the effects of market volatilities on Babcock Wilcox and Alta Equipment 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 Wilcox with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Alta Equipment.
Diversification Opportunities for Babcock Wilcox and Alta Equipment
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Babcock and Alta is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group and Babcock Wilcox 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 Wilcox Enterprises are associated (or correlated) with Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Alta Equipment go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Alta Equipment
Assuming the 90 days horizon Babcock Wilcox is expected to generate 3.85 times less return on investment than Alta Equipment. In addition to that, Babcock Wilcox is 2.17 times more volatile than Alta Equipment Group. It trades about 0.0 of its total potential returns per unit of risk. Alta Equipment Group is currently generating about 0.03 per unit of volatility. If you would invest 2,147 in Alta Equipment Group on November 2, 2024 and sell it today you would earn a total of 398.00 from holding Alta Equipment Group or generate 18.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Alta Equipment Group
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Alta Equipment Group |
Babcock Wilcox and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Alta Equipment
The main advantage of trading using opposite Babcock Wilcox and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Alta Equipment 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 Alta Equipment will offset losses from the drop in Alta Equipment's long position.| Babcock Wilcox vs. Atlanticus Holdings Corp | Babcock Wilcox vs. Costamare | Babcock Wilcox vs. Alta Equipment Group | Babcock Wilcox vs. Global Ship Lease |
| Alta Equipment vs. Triton International Limited | Alta Equipment vs. Babcock Wilcox Enterprises | Alta Equipment vs. Triton International Limited | Alta Equipment vs. Triton International Limited |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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