Correlation Between Crane NXT and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Crane NXT 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 Crane NXT and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane NXT Co and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Crane NXT 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 Crane NXT with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane NXT and Babcock Wilcox.
Diversification Opportunities for Crane NXT and Babcock Wilcox
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Crane and Babcock is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Crane NXT Co 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 Crane NXT 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 Crane NXT Co 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 Crane NXT i.e., Crane NXT and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Crane NXT and Babcock Wilcox
Considering the 90-day investment horizon Crane NXT Co is expected to generate 0.29 times more return on investment than Babcock Wilcox. However, Crane NXT Co is 3.44 times less risky than Babcock Wilcox. It trades about 0.06 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about 0.0 per unit of risk. If you would invest 3,600 in Crane NXT Co on August 23, 2024 and sell it today you would earn a total of 2,086 from holding Crane NXT Co or generate 57.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crane NXT Co vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Crane NXT |
| Babcock Wilcox Enter |
Crane NXT and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane NXT and Babcock Wilcox
The main advantage of trading using opposite Crane NXT and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane NXT 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.| Crane NXT vs. Donaldson | Crane NXT vs. ITT Inc | Crane NXT vs. Franklin Electric Co | Crane NXT vs. Enerpac Tool Group |
| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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