Correlation Between BWX Technologies and Verbund AG
Can any of the company-specific risk be diversified away by investing in both BWX Technologies and Verbund AG 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 Verbund AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BWX Technologies and Verbund AG ADR, you can compare the effects of market volatilities on BWX Technologies and Verbund AG 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 Verbund AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BWX Technologies and Verbund AG.
Diversification Opportunities for BWX Technologies and Verbund AG
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BWX and Verbund is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Verbund AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verbund AG ADR 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 Verbund AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verbund AG ADR has no effect on the direction of BWX Technologies i.e., BWX Technologies and Verbund AG go up and down completely randomly.
Pair Corralation between BWX Technologies and Verbund AG
Given the investment horizon of 90 days BWX Technologies is expected to generate 0.54 times more return on investment than Verbund AG. However, BWX Technologies is 1.85 times less risky than Verbund AG. It trades about 0.13 of its potential returns per unit of risk. Verbund AG ADR is currently generating about -0.01 per unit of risk. If you would invest 12,352 in BWX Technologies on August 28, 2024 and sell it today you would earn a total of 687.00 from holding BWX Technologies or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BWX Technologies vs. Verbund AG ADR
Performance |
| Timeline |
| BWX Technologies |
| Verbund AG ADR |
BWX Technologies and Verbund AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BWX Technologies and Verbund AG
The main advantage of trading using opposite BWX Technologies and Verbund AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies position performs unexpectedly, Verbund AG 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 Verbund AG will offset losses from the drop in Verbund AG's long position.| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
| Verbund AG vs. Alternus Energy Group | Verbund AG vs. First National Energy | Verbund AG vs. Tokyo Electric Power | Verbund AG vs. Clearway Energy Class |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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