Correlation Between BWX Technologies and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both BWX Technologies and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BWX Technologies and Rheinmetall AG ADR, you can compare the effects of market volatilities on BWX Technologies and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of BWX Technologies and Rheinmetall.
Diversification Opportunities for BWX Technologies and Rheinmetall
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BWX and Rheinmetall is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Rheinmetall AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG ADR has no effect on the direction of BWX Technologies i.e., BWX Technologies and Rheinmetall go up and down completely randomly.
Pair Corralation between BWX Technologies and Rheinmetall
Given the investment horizon of 90 days BWX Technologies is expected to generate 2.94 times less return on investment than Rheinmetall. But when comparing it to its historical volatility, BWX Technologies is 1.31 times less risky than Rheinmetall. It trades about 0.07 of its potential returns per unit of risk. Rheinmetall AG ADR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,018 in Rheinmetall AG ADR on December 4, 2024 and sell it today you would earn a total of 19,898 from holding Rheinmetall AG ADR or generate 396.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
BWX Technologies vs. Rheinmetall AG ADR
Performance |
| Timeline |
| BWX Technologies |
| Rheinmetall AG ADR |
BWX Technologies and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BWX Technologies and Rheinmetall
The main advantage of trading using opposite BWX Technologies and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
| Rheinmetall vs. Hensoldt AG | Rheinmetall vs. Heico | Rheinmetall vs. AeroVironment | Rheinmetall vs. Transdigm Group Incorporated |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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