Correlation Between Babcock Wilcox and Omega Flex
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Omega Flex 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 Omega Flex 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 Omega Flex, you can compare the effects of market volatilities on Babcock Wilcox and Omega Flex 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 Omega Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Omega Flex.
Diversification Opportunities for Babcock Wilcox and Omega Flex
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Babcock and Omega is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Omega Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Flex 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 Omega Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Flex has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Omega Flex go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Omega Flex
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Omega Flex. In addition to that, Babcock Wilcox is 1.77 times more volatile than Omega Flex. It trades about -0.36 of its total potential returns per unit of risk. Omega Flex is currently generating about -0.04 per unit of volatility. If you would invest 4,100 in Omega Flex on November 2, 2024 and sell it today you would lose (107.00) from holding Omega Flex or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Omega Flex
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Omega Flex |
Babcock Wilcox and Omega Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Omega Flex
The main advantage of trading using opposite Babcock Wilcox and Omega Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Omega Flex 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 Omega Flex will offset losses from the drop in Omega Flex'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 |
| Omega Flex vs. Helios Technologies | Omega Flex vs. Enpro Industries | Omega Flex vs. Luxfer Holdings PLC | Omega Flex vs. Hurco Companies |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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