Correlation Between Babcock Wilcox and SiriusPoint
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and SiriusPoint 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 SiriusPoint 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 SiriusPoint, you can compare the effects of market volatilities on Babcock Wilcox and SiriusPoint 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 SiriusPoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and SiriusPoint.
Diversification Opportunities for Babcock Wilcox and SiriusPoint
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Babcock and SiriusPoint is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and SiriusPoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiriusPoint 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 SiriusPoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiriusPoint has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and SiriusPoint go up and down completely randomly.
Pair Corralation between Babcock Wilcox and SiriusPoint
Given the investment horizon of 90 days Babcock Wilcox Enterprises is expected to generate 5.26 times more return on investment than SiriusPoint. However, Babcock Wilcox is 5.26 times more volatile than SiriusPoint. It trades about 0.03 of its potential returns per unit of risk. SiriusPoint is currently generating about 0.1 per unit of risk. If you would invest 1,868 in Babcock Wilcox Enterprises on August 31, 2024 and sell it today you would earn a total of 292.00 from holding Babcock Wilcox Enterprises or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. SiriusPoint
Performance |
| Timeline |
| Babcock Wilcox Enter |
| SiriusPoint |
Babcock Wilcox and SiriusPoint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and SiriusPoint
The main advantage of trading using opposite Babcock Wilcox and SiriusPoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, SiriusPoint 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 SiriusPoint will offset losses from the drop in SiriusPoint's long position.| Babcock Wilcox vs. Cemex SAB de | Babcock Wilcox vs. Sinosteel Luonai Materials | Babcock Wilcox vs. Shandong Longquan Pipeline | Babcock Wilcox vs. CRH PLC ADR |
| SiriusPoint vs. RLJ Lodging Trust | SiriusPoint vs. Argo Group International | SiriusPoint vs. New York Mortgage |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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