Correlation Between Babcock Wilcox and Corporacion America
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Corporacion America 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 Corporacion America 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 Corporacion America Airports, you can compare the effects of market volatilities on Babcock Wilcox and Corporacion America 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 Corporacion America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Corporacion America.
Diversification Opportunities for Babcock Wilcox and Corporacion America
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and Corporacion is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America 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 Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Corporacion America go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Corporacion America
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to generate 2.21 times more return on investment than Corporacion America. However, Babcock Wilcox is 2.21 times more volatile than Corporacion America Airports. It trades about 0.02 of its potential returns per unit of risk. Corporacion America Airports is currently generating about -0.04 per unit of risk. If you would invest 161.00 in Babcock Wilcox Enterprises on October 20, 2024 and sell it today you would earn a total of 0.00 from holding Babcock Wilcox Enterprises or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Corporacion America Airports
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Corporacion America |
Babcock Wilcox and Corporacion America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Corporacion America
The main advantage of trading using opposite Babcock Wilcox and Corporacion America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Corporacion America 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 Corporacion America will offset losses from the drop in Corporacion America's long position.| Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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