Correlation Between Babcock Wilcox and Richtech Robotics
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Richtech Robotics 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 Richtech Robotics 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 Richtech Robotics Class, you can compare the effects of market volatilities on Babcock Wilcox and Richtech Robotics 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 Richtech Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Richtech Robotics.
Diversification Opportunities for Babcock Wilcox and Richtech Robotics
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Babcock and Richtech is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Richtech Robotics Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richtech Robotics Class 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 Richtech Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richtech Robotics Class has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Richtech Robotics go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Richtech Robotics
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Richtech Robotics. But the stock apears to be less risky and, when comparing its historical volatility, Babcock Wilcox Enterprises is 1.83 times less risky than Richtech Robotics. The stock trades about -0.21 of its potential returns per unit of risk. The Richtech Robotics Class is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 310.00 in Richtech Robotics Class on November 18, 2024 and sell it today you would lose (35.00) from holding Richtech Robotics Class or give up 11.29% 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. Richtech Robotics Class
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Richtech Robotics Class |
Babcock Wilcox and Richtech Robotics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Richtech Robotics
The main advantage of trading using opposite Babcock Wilcox and Richtech Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Richtech Robotics 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 Richtech Robotics will offset losses from the drop in Richtech Robotics' long position.| Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
| Richtech Robotics vs. BRP Inc | Richtech Robotics vs. Kingdee International Software | Richtech Robotics vs. JD Sports Fashion | Richtech Robotics vs. Canlan Ice Sports |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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