Correlation Between Babcock Wilcox and Rail Vision
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Rail Vision 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 Rail Vision 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 Rail Vision Ltd, you can compare the effects of market volatilities on Babcock Wilcox and Rail Vision 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 Rail Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Rail Vision.
Diversification Opportunities for Babcock Wilcox and Rail Vision
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and Rail is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Rail Vision Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rail Vision 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 Rail Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rail Vision has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Rail Vision go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Rail Vision
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Rail Vision. But the stock apears to be less risky and, when comparing its historical volatility, Babcock Wilcox Enterprises is 4.73 times less risky than Rail Vision. The stock trades about -0.09 of its potential returns per unit of risk. The Rail Vision Ltd is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4.20 in Rail Vision Ltd on August 31, 2024 and sell it today you would earn a total of 1.81 from holding Rail Vision Ltd or generate 43.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Rail Vision Ltd
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Rail Vision |
Babcock Wilcox and Rail Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Rail Vision
The main advantage of trading using opposite Babcock Wilcox and Rail Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Rail Vision 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 Rail Vision will offset losses from the drop in Rail Vision's long position.| Babcock Wilcox vs. Standex International | Babcock Wilcox vs. Donaldson | Babcock Wilcox vs. CSW Industrials | 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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