Correlation Between Babcock Wilcox and TFI International
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and TFI International 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 TFI International 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 TFI International, you can compare the effects of market volatilities on Babcock Wilcox and TFI International 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 TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and TFI International.
Diversification Opportunities for Babcock Wilcox and TFI International
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Babcock and TFI is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International 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 TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and TFI International go up and down completely randomly.
Pair Corralation between Babcock Wilcox and TFI International
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to generate 3.85 times more return on investment than TFI International. However, Babcock Wilcox is 3.85 times more volatile than TFI International. It trades about 0.04 of its potential returns per unit of risk. TFI International is currently generating about 0.06 per unit of risk. If you would invest 167.00 in Babcock Wilcox Enterprises on August 27, 2024 and sell it today you would earn a total of 23.00 from holding Babcock Wilcox Enterprises or generate 13.77% 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. TFI International
Performance |
| Timeline |
| Babcock Wilcox Enter |
| TFI International |
Babcock Wilcox and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and TFI International
The main advantage of trading using opposite Babcock Wilcox and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, TFI International 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 TFI International will offset losses from the drop in TFI International's long position.| Babcock Wilcox vs. Barnes Group | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Hillenbrand | Babcock Wilcox vs. Ingersoll Rand |
| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Knight Transportation | TFI International vs. Universal Logistics Holdings |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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