Correlation Between Babcock Wilcox and Core Main

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Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Core Main 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 Core Main 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 Core Main, you can compare the effects of market volatilities on Babcock Wilcox and Core Main 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 Core Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Core Main.

Diversification Opportunities for Babcock Wilcox and Core Main

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Babcock and Core is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Core Main in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Main 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 Core Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Main has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Core Main go up and down completely randomly.

Pair Corralation between Babcock Wilcox and Core Main

Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Core Main. In addition to that, Babcock Wilcox is 3.05 times more volatile than Core Main. It trades about -0.36 of its total potential returns per unit of risk. Core Main is currently generating about 0.38 per unit of volatility. If you would invest  5,133  in Core Main on November 2, 2024 and sell it today you would earn a total of  570.00  from holding Core Main or generate 11.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Babcock Wilcox Enterprises  vs.  Core Main

 Performance 
       Timeline  
Babcock Wilcox Enter 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Babcock Wilcox Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Core Main 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Core Main are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Core Main displayed solid returns over the last few months and may actually be approaching a breakup point.

Babcock Wilcox and Core Main Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Babcock Wilcox and Core Main

The main advantage of trading using opposite Babcock Wilcox and Core Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Core Main 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 Core Main will offset losses from the drop in Core Main's long position.
The idea behind Babcock Wilcox Enterprises and Core Main pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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