Correlation Between Babcock Wilcox and MSCI ACWI
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and MSCI ACWI 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 MSCI ACWI 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 MSCI ACWI exAUCONSUMER, you can compare the effects of market volatilities on Babcock Wilcox and MSCI ACWI 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 MSCI ACWI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and MSCI ACWI.
Diversification Opportunities for Babcock Wilcox and MSCI ACWI
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Babcock and MSCI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises, and MSCI ACWI exAUCONSUMER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSCI ACWI exAUCONSUMER 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 MSCI ACWI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSCI ACWI exAUCONSUMER has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and MSCI ACWI go up and down completely randomly.
Pair Corralation between Babcock Wilcox and MSCI ACWI
Given the investment horizon of 90 days Babcock Wilcox Enterprises, is expected to generate 7.79 times more return on investment than MSCI ACWI. However, Babcock Wilcox is 7.79 times more volatile than MSCI ACWI exAUCONSUMER. It trades about 0.03 of its potential returns per unit of risk. MSCI ACWI exAUCONSUMER is currently generating about 0.13 per unit of risk. If you would invest 2,115 in Babcock Wilcox Enterprises, on August 28, 2024 and sell it today you would earn a total of 235.00 from holding Babcock Wilcox Enterprises, or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises, vs. MSCI ACWI exAUCONSUMER
Performance |
| Timeline |
| Babcock Wilcox Enter |
| MSCI ACWI exAUCONSUMER |
Babcock Wilcox and MSCI ACWI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and MSCI ACWI
The main advantage of trading using opposite Babcock Wilcox and MSCI ACWI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, MSCI ACWI 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 MSCI ACWI will offset losses from the drop in MSCI ACWI'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 |
| MSCI ACWI vs. Harrow Health 8625 | MSCI ACWI vs. Babcock Wilcox Enterprises, | MSCI ACWI vs. Babcock Wilcox Enterprises | MSCI ACWI vs. TRINL |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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