Correlation Between Babcock Wilcox and Joby Aviation
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Joby Aviation 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 Joby Aviation 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 Joby Aviation, you can compare the effects of market volatilities on Babcock Wilcox and Joby Aviation 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 Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Joby Aviation.
Diversification Opportunities for Babcock Wilcox and Joby Aviation
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Babcock and Joby is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation 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 Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Joby Aviation go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Joby Aviation
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to generate 1.16 times more return on investment than Joby Aviation. However, Babcock Wilcox is 1.16 times more volatile than Joby Aviation. It trades about -0.09 of its potential returns per unit of risk. Joby Aviation is currently generating about -0.2 per unit of risk. If you would invest 163.00 in Babcock Wilcox Enterprises on November 9, 2024 and sell it today you would lose (17.00) from holding Babcock Wilcox Enterprises or give up 10.43% 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. Joby Aviation
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Joby Aviation |
Babcock Wilcox and Joby Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Joby Aviation
The main advantage of trading using opposite Babcock Wilcox and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Joby Aviation 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 Joby Aviation will offset losses from the drop in Joby Aviation'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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