Correlation Between BWX Technologies and Accor SA
Can any of the company-specific risk be diversified away by investing in both BWX Technologies and Accor SA 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 BWX Technologies and Accor SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BWX Technologies and Accor SA, you can compare the effects of market volatilities on BWX Technologies and Accor SA 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 BWX Technologies with a short position of Accor SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BWX Technologies and Accor SA.
Diversification Opportunities for BWX Technologies and Accor SA
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BWX and Accor is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Accor SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accor SA and BWX Technologies 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 BWX Technologies are associated (or correlated) with Accor SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accor SA has no effect on the direction of BWX Technologies i.e., BWX Technologies and Accor SA go up and down completely randomly.
Pair Corralation between BWX Technologies and Accor SA
Given the investment horizon of 90 days BWX Technologies is expected to generate 1.13 times less return on investment than Accor SA. But when comparing it to its historical volatility, BWX Technologies is 1.65 times less risky than Accor SA. It trades about 0.11 of its potential returns per unit of risk. Accor SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,509 in Accor SA on August 27, 2024 and sell it today you would earn a total of 1,936 from holding Accor SA or generate 77.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 71.37% |
| Values | Daily Returns |
BWX Technologies vs. Accor SA
Performance |
| Timeline |
| BWX Technologies |
| Accor SA |
BWX Technologies and Accor SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BWX Technologies and Accor SA
The main advantage of trading using opposite BWX Technologies and Accor SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies position performs unexpectedly, Accor SA 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 Accor SA will offset losses from the drop in Accor SA's long position.| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
| Accor SA vs. Hilton Worldwide Holdings | Accor SA vs. InterContinental Hotels Group | Accor SA vs. Marriott International | Accor SA vs. Choice Hotels International |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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