Correlation Between Babcock Wilcox and Runway Growth
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Runway Growth 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 Runway Growth 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 Runway Growth Finance, you can compare the effects of market volatilities on Babcock Wilcox and Runway Growth 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 Runway Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Runway Growth.
Diversification Opportunities for Babcock Wilcox and Runway Growth
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Babcock and Runway is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises, and Runway Growth Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Runway Growth Finance 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 Runway Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Runway Growth Finance has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Runway Growth go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Runway Growth
Given the investment horizon of 90 days Babcock Wilcox Enterprises, is expected to generate 8.52 times more return on investment than Runway Growth. However, Babcock Wilcox is 8.52 times more volatile than Runway Growth Finance. It trades about 0.03 of its potential returns per unit of risk. Runway Growth Finance is currently generating about 0.15 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises, vs. Runway Growth Finance
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Runway Growth Finance |
Babcock Wilcox and Runway Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Runway Growth
The main advantage of trading using opposite Babcock Wilcox and Runway Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Runway Growth 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 Runway Growth will offset losses from the drop in Runway Growth'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 |
| Runway Growth vs. B Riley Financial | Runway Growth vs. Atlanticus Holdings Corp | Runway Growth vs. Atlas Corp | Runway Growth vs. Harrow Health 8625 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |