Correlation Between Babcock Wilcox and Sunrun
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Sunrun 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 Sunrun 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 Sunrun Inc, you can compare the effects of market volatilities on Babcock Wilcox and Sunrun 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 Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Sunrun.
Diversification Opportunities for Babcock Wilcox and Sunrun
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Babcock and Sunrun is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc 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 Sunrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrun Inc has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Sunrun go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Sunrun
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Sunrun. But the stock apears to be less risky and, when comparing its historical volatility, Babcock Wilcox Enterprises is 1.11 times less risky than Sunrun. The stock trades about -0.1 of its potential returns per unit of risk. The Sunrun Inc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,414 in Sunrun Inc on August 30, 2024 and sell it today you would lose (259.00) from holding Sunrun Inc or give up 18.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Sunrun Inc
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Sunrun Inc |
Babcock Wilcox and Sunrun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Sunrun
The main advantage of trading using opposite Babcock Wilcox and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Sunrun 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 Sunrun will offset losses from the drop in Sunrun'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 |
| Sunrun vs. 1847 Holdings LLC | Sunrun vs. Westport Fuel Systems | Sunrun vs. Falcons Beyond Global, | Sunrun vs. Brookfield Business Partners |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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