Correlation Between BWX Technologies and Thales SA

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Can any of the company-specific risk be diversified away by investing in both BWX Technologies and Thales 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 Thales 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 Thales SA, you can compare the effects of market volatilities on BWX Technologies and Thales 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 Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BWX Technologies and Thales SA.

Diversification Opportunities for BWX Technologies and Thales SA

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between BWX and Thales is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of BWX Technologies i.e., BWX Technologies and Thales SA go up and down completely randomly.

Pair Corralation between BWX Technologies and Thales SA

Given the investment horizon of 90 days BWX Technologies is expected to generate 0.81 times more return on investment than Thales SA. However, BWX Technologies is 1.23 times less risky than Thales SA. It trades about -0.07 of its potential returns per unit of risk. Thales SA is currently generating about -0.32 per unit of risk. If you would invest  12,669  in BWX Technologies on September 13, 2024 and sell it today you would lose (385.00) from holding BWX Technologies or give up 3.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy90.48%
ValuesDaily Returns

BWX Technologies  vs.  Thales SA

 Performance 
       Timeline  
BWX Technologies 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in BWX Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, BWX Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.
Thales SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Thales SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BWX Technologies and Thales SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BWX Technologies and Thales SA

The main advantage of trading using opposite BWX Technologies and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies position performs unexpectedly, Thales 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 Thales SA will offset losses from the drop in Thales SA's long position.
The idea behind BWX Technologies and Thales SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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