Correlation Between Babcock Wilcox and Solarmax Technology
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Solarmax Technology 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 Solarmax Technology 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 Solarmax Technology Common, you can compare the effects of market volatilities on Babcock Wilcox and Solarmax Technology 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 Solarmax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Solarmax Technology.
Diversification Opportunities for Babcock Wilcox and Solarmax Technology
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and Solarmax is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Solarmax Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solarmax Technology 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 Solarmax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solarmax Technology has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Solarmax Technology go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Solarmax Technology
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the Solarmax Technology. In addition to that, Babcock Wilcox is 1.6 times more volatile than Solarmax Technology Common. It trades about -0.14 of its total potential returns per unit of risk. Solarmax Technology Common is currently generating about 0.2 per unit of volatility. If you would invest 95.00 in Solarmax Technology Common on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Solarmax Technology Common or generate 18.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Solarmax Technology Common
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Solarmax Technology |
Babcock Wilcox and Solarmax Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Solarmax Technology
The main advantage of trading using opposite Babcock Wilcox and Solarmax Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Solarmax Technology 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 Solarmax Technology will offset losses from the drop in Solarmax Technology's long position.| Babcock Wilcox vs. Barnes Group | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Hillenbrand | Babcock Wilcox vs. Ingersoll Rand |
| Solarmax Technology vs. 1847 Holdings LLC | Solarmax Technology vs. Westport Fuel Systems | Solarmax Technology vs. Falcons Beyond Global, | Solarmax Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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