Correlation Between BWX Technologies and Dr Martens
Can any of the company-specific risk be diversified away by investing in both BWX Technologies and Dr Martens 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 Dr Martens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BWX Technologies and Dr Martens plc, you can compare the effects of market volatilities on BWX Technologies and Dr Martens 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 Dr Martens. Check out your portfolio center. Please also check ongoing floating volatility patterns of BWX Technologies and Dr Martens.
Diversification Opportunities for BWX Technologies and Dr Martens
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BWX and DOCMF is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Dr Martens plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Martens plc 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 Dr Martens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Martens plc has no effect on the direction of BWX Technologies i.e., BWX Technologies and Dr Martens go up and down completely randomly.
Pair Corralation between BWX Technologies and Dr Martens
Given the investment horizon of 90 days BWX Technologies is expected to generate 1.03 times more return on investment than Dr Martens. However, BWX Technologies is 1.03 times more volatile than Dr Martens plc. It trades about 0.2 of its potential returns per unit of risk. Dr Martens plc is currently generating about -0.02 per unit of risk. If you would invest 12,214 in BWX Technologies on August 25, 2024 and sell it today you would earn a total of 1,075 from holding BWX Technologies or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BWX Technologies vs. Dr Martens plc
Performance |
| Timeline |
| BWX Technologies |
| Dr Martens plc |
BWX Technologies and Dr Martens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BWX Technologies and Dr Martens
The main advantage of trading using opposite BWX Technologies and Dr Martens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies position performs unexpectedly, Dr Martens 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 Dr Martens will offset losses from the drop in Dr Martens' long position.| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
| Dr Martens vs. American Rebel Holdings | Dr Martens vs. Designer Brands | Dr Martens vs. Renewable Energy and | Dr Martens vs. Crocs Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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