Correlation Between BWX Technologies and US Nuclear
Can any of the company-specific risk be diversified away by investing in both BWX Technologies and US Nuclear 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 US Nuclear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BWX Technologies and US Nuclear Corp, you can compare the effects of market volatilities on BWX Technologies and US Nuclear 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 US Nuclear. Check out your portfolio center. Please also check ongoing floating volatility patterns of BWX Technologies and US Nuclear.
Diversification Opportunities for BWX Technologies and US Nuclear
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BWX and UCLE is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and US Nuclear Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Nuclear Corp 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 US Nuclear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Nuclear Corp has no effect on the direction of BWX Technologies i.e., BWX Technologies and US Nuclear go up and down completely randomly.
Pair Corralation between BWX Technologies and US Nuclear
Given the investment horizon of 90 days BWX Technologies is expected to generate 26.73 times less return on investment than US Nuclear. But when comparing it to its historical volatility, BWX Technologies is 35.44 times less risky than US Nuclear. It trades about 0.12 of its potential returns per unit of risk. US Nuclear Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11.00 in US Nuclear Corp on August 31, 2024 and sell it today you would lose (7.90) from holding US Nuclear Corp or give up 71.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BWX Technologies vs. US Nuclear Corp
Performance |
| Timeline |
| BWX Technologies |
| US Nuclear Corp |
BWX Technologies and US Nuclear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BWX Technologies and US Nuclear
The main advantage of trading using opposite BWX Technologies and US Nuclear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies position performs unexpectedly, US Nuclear 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 US Nuclear will offset losses from the drop in US Nuclear's long position.| BWX Technologies vs. Innovative Solutions and | BWX Technologies vs. National Presto Industries | BWX Technologies vs. Hexcel | BWX Technologies vs. Park Electrochemical |
| US Nuclear vs. Sono Tek Corp | US Nuclear vs. Novanta | US Nuclear vs. ESCO Technologies | US Nuclear vs. Vontier Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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