Correlation Between Babcock Wilcox and Nextracker
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Nextracker 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 Nextracker 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 Nextracker Class A, you can compare the effects of market volatilities on Babcock Wilcox and Nextracker 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 Nextracker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Nextracker.
Diversification Opportunities for Babcock Wilcox and Nextracker
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and Nextracker is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A 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 Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Nextracker go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Nextracker
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Nextracker. In addition to that, Babcock Wilcox is 1.18 times more volatile than Nextracker Class A. It trades about -0.1 of its total potential returns per unit of risk. Nextracker Class A is currently generating about 0.15 per unit of volatility. If you would invest 3,142 in Nextracker Class A on August 24, 2024 and sell it today you would earn a total of 598.00 from holding Nextracker Class A or generate 19.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Nextracker Class A
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Nextracker Class A |
Babcock Wilcox and Nextracker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Nextracker
The main advantage of trading using opposite Babcock Wilcox and Nextracker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Nextracker 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 Nextracker will offset losses from the drop in Nextracker'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 |
| Nextracker vs. Harmony Gold Mining | Nextracker vs. Western Copper and | Nextracker vs. Tandem Diabetes Care | Nextracker vs. Apogee Enterprises |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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