Correlation Between Babcock Wilcox and Sachem Capital
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Sachem Capital 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 Sachem Capital 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 Sachem Capital Corp, you can compare the effects of market volatilities on Babcock Wilcox and Sachem Capital 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 Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Sachem Capital.
Diversification Opportunities for Babcock Wilcox and Sachem Capital
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Babcock and Sachem is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises, and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital 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 Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Sachem Capital go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Sachem Capital
Given the investment horizon of 90 days Babcock Wilcox Enterprises, is expected to generate 1.97 times more return on investment than Sachem Capital. However, Babcock Wilcox is 1.97 times more volatile than Sachem Capital Corp. It trades about -0.11 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about -0.36 per unit of risk. If you would invest 2,398 in Babcock Wilcox Enterprises, on August 31, 2024 and sell it today you would lose (47.00) from holding Babcock Wilcox Enterprises, or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises, vs. Sachem Capital Corp
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Sachem Capital Corp |
Babcock Wilcox and Sachem Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Sachem Capital
The main advantage of trading using opposite Babcock Wilcox and Sachem Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Sachem Capital 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 Sachem Capital will offset losses from the drop in Sachem Capital'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 |
| Sachem Capital vs. Sachem Capital Corp | Sachem Capital vs. Harrow Health 8625 | Sachem Capital vs. Babcock Wilcox Enterprises, |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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