Correlation Between BWX Technologies and Safran SA
Can any of the company-specific risk be diversified away by investing in both BWX Technologies and Safran 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 Safran 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 Safran SA, you can compare the effects of market volatilities on BWX Technologies and Safran 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 Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BWX Technologies and Safran SA.
Diversification Opportunities for BWX Technologies and Safran SA
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BWX and Safran is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran 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 Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of BWX Technologies i.e., BWX Technologies and Safran SA go up and down completely randomly.
Pair Corralation between BWX Technologies and Safran SA
Given the investment horizon of 90 days BWX Technologies is expected to generate 1.2 times more return on investment than Safran SA. However, BWX Technologies is 1.2 times more volatile than Safran SA. It trades about 0.2 of its potential returns per unit of risk. Safran SA is currently generating about 0.13 per unit of risk. If you would invest 11,945 in BWX Technologies on September 5, 2024 and sell it today you would earn a total of 975.00 from holding BWX Technologies or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BWX Technologies vs. Safran SA
Performance |
| Timeline |
| BWX Technologies |
| Safran SA |
BWX Technologies and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BWX Technologies and Safran SA
The main advantage of trading using opposite BWX Technologies and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies position performs unexpectedly, Safran 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 Safran SA will offset losses from the drop in Safran SA's long position.| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
| Safran SA vs. Airbus Group NV | Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Airbus Group SE |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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