Correlation Between Babcock Wilcox and Enerpac Tool
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Enerpac Tool 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 Enerpac Tool 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 Enerpac Tool Group, you can compare the effects of market volatilities on Babcock Wilcox and Enerpac Tool 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 Enerpac Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Enerpac Tool.
Diversification Opportunities for Babcock Wilcox and Enerpac Tool
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Babcock and Enerpac is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Enerpac Tool Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerpac Tool 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 Enerpac Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerpac Tool Group has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Enerpac Tool go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Enerpac Tool
Allowing for the 90-day total investment horizon Babcock Wilcox is expected to generate 6.63 times less return on investment than Enerpac Tool. In addition to that, Babcock Wilcox is 3.63 times more volatile than Enerpac Tool Group. It trades about 0.0 of its total potential returns per unit of risk. Enerpac Tool Group is currently generating about 0.08 per unit of volatility. If you would invest 2,506 in Enerpac Tool Group on August 23, 2024 and sell it today you would earn a total of 2,283 from holding Enerpac Tool Group or generate 91.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Enerpac Tool Group
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Enerpac Tool Group |
Babcock Wilcox and Enerpac Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Enerpac Tool
The main advantage of trading using opposite Babcock Wilcox and Enerpac Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Enerpac Tool 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 Enerpac Tool will offset losses from the drop in Enerpac Tool'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 |
| Enerpac Tool vs. Omega Flex | Enerpac Tool vs. Luxfer Holdings PLC | Enerpac Tool vs. Gorman Rupp | Enerpac Tool vs. John Bean Technologies |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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