Correlation Between Babcock Wilcox and Twin Disc
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Twin Disc 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 Twin Disc 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 Twin Disc Incorporated, you can compare the effects of market volatilities on Babcock Wilcox and Twin Disc 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 Twin Disc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Twin Disc.
Diversification Opportunities for Babcock Wilcox and Twin Disc
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and Twin is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Twin Disc Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twin Disc 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 Twin Disc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twin Disc has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Twin Disc go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Twin Disc
Allowing for the 90-day total investment horizon Babcock Wilcox is expected to generate 2.13 times less return on investment than Twin Disc. In addition to that, Babcock Wilcox is 2.25 times more volatile than Twin Disc Incorporated. It trades about 0.0 of its total potential returns per unit of risk. Twin Disc Incorporated is currently generating about 0.02 per unit of volatility. If you would invest 1,084 in Twin Disc Incorporated on August 25, 2024 and sell it today you would earn a total of 58.00 from holding Twin Disc Incorporated or generate 5.35% 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. Twin Disc Incorporated
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Twin Disc |
Babcock Wilcox and Twin Disc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Twin Disc
The main advantage of trading using opposite Babcock Wilcox and Twin Disc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Twin Disc 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 Twin Disc will offset losses from the drop in Twin Disc'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 |
| Twin Disc vs. Standex International | Twin Disc vs. Intevac | Twin Disc vs. Thermon Group Holdings | Twin Disc vs. Enpro Industries |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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