Correlation Between Babcock Wilcox and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Clean Energy 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 Clean Energy 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 Clean Energy Technologies,, you can compare the effects of market volatilities on Babcock Wilcox and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Clean Energy.
Diversification Opportunities for Babcock Wilcox and Clean Energy
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Babcock and Clean is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Clean Energy Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Technol 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Technol has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Clean Energy go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Clean Energy
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Clean Energy. In addition to that, Babcock Wilcox is 1.02 times more volatile than Clean Energy Technologies,. It trades about -0.09 of its total potential returns per unit of risk. Clean Energy Technologies, is currently generating about 0.0 per unit of volatility. If you would invest 73.00 in Clean Energy Technologies, on August 31, 2024 and sell it today you would lose (4.00) from holding Clean Energy Technologies, or give up 5.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Clean Energy Technologies,
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Clean Energy Technol |
Babcock Wilcox and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Clean Energy
The main advantage of trading using opposite Babcock Wilcox and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| Babcock Wilcox vs. Standex International | Babcock Wilcox vs. Donaldson | Babcock Wilcox vs. CSW Industrials | Babcock Wilcox vs. Franklin Electric Co |
| Clean Energy vs. Graco Inc | Clean Energy vs. Franklin Electric Co | Clean Energy vs. Flowserve | Clean Energy vs. Donaldson |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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