Correlation Between BWX Technologies and Thales SA
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 ADR, 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
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BWX and Thales is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Thales SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA 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 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 ADR 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 1.08 times more return on investment than Thales SA. However, BWX Technologies is 1.08 times more volatile than Thales SA ADR. It trades about 0.16 of its potential returns per unit of risk. Thales SA ADR is currently generating about -0.04 per unit of risk. If you would invest 8,903 in BWX Technologies on September 12, 2024 and sell it today you would earn a total of 3,307 from holding BWX Technologies or generate 37.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BWX Technologies vs. Thales SA ADR
Performance |
| Timeline |
| BWX Technologies |
| Thales SA ADR |
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.| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
| Thales SA vs. Rolls Royce Holdings PLC | Thales SA vs. VirTra Inc | Thales SA vs. BWX Technologies | Thales SA vs. Embraer SA ADR |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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