Correlation Between Babcock Wilcox and Atlas Corp
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Atlas Corp 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 Atlas Corp 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 Atlas Corp, you can compare the effects of market volatilities on Babcock Wilcox and Atlas Corp 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 Atlas Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Atlas Corp.
Diversification Opportunities for Babcock Wilcox and Atlas Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Babcock and Atlas is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises, and Atlas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Corp 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 Atlas Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Corp has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Atlas Corp go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Atlas Corp
Given the investment horizon of 90 days Babcock Wilcox Enterprises, is expected to under-perform the Atlas Corp. In addition to that, Babcock Wilcox is 1.89 times more volatile than Atlas Corp. It trades about -0.11 of its total potential returns per unit of risk. Atlas Corp is currently generating about 0.06 per unit of volatility. If you would invest 2,498 in Atlas Corp on August 27, 2024 and sell it today you would earn a total of 12.00 from holding Atlas Corp or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises, vs. Atlas Corp
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Atlas Corp |
Babcock Wilcox and Atlas Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Atlas Corp
The main advantage of trading using opposite Babcock Wilcox and Atlas Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Atlas Corp 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 Atlas Corp will offset losses from the drop in Atlas Corp's long position.| Babcock Wilcox vs. Harrow Health 8625 | Babcock Wilcox vs. Babcock Wilcox Enterprises | Babcock Wilcox vs. B Riley Financial | Babcock Wilcox vs. Eagle Point Credit |
| Atlas Corp vs. Old Dominion Freight | Atlas Corp vs. ArcBest Corp | Atlas Corp vs. Knight Transportation | Atlas Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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