Correlation Between CSW Industrials and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both CSW Industrials and Babcock Wilcox 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 CSW Industrials and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSW Industrials and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on CSW Industrials and Babcock Wilcox 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 CSW Industrials with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSW Industrials and Babcock Wilcox.
Diversification Opportunities for CSW Industrials and Babcock Wilcox
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CSW and Babcock is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CSW Industrials and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter and CSW Industrials 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 CSW Industrials are associated (or correlated) with Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of CSW Industrials i.e., CSW Industrials and Babcock Wilcox go up and down completely randomly.
Pair Corralation between CSW Industrials and Babcock Wilcox
Given the investment horizon of 90 days CSW Industrials is expected to generate 0.28 times more return on investment than Babcock Wilcox. However, CSW Industrials is 3.62 times less risky than Babcock Wilcox. It trades about 0.39 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.06 per unit of risk. If you would invest 35,845 in CSW Industrials on September 2, 2024 and sell it today you would earn a total of 6,394 from holding CSW Industrials or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSW Industrials vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| CSW Industrials |
| Babcock Wilcox Enter |
CSW Industrials and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSW Industrials and Babcock Wilcox
The main advantage of trading using opposite CSW Industrials and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSW Industrials position performs unexpectedly, Babcock Wilcox 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 Babcock Wilcox will offset losses from the drop in Babcock Wilcox's long position.| CSW Industrials vs. Enerpac Tool Group | CSW Industrials vs. Luxfer Holdings PLC | CSW Industrials vs. John Bean Technologies | CSW Industrials vs. ITT Inc |
| Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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