Correlation Between Ehang Holdings and BWX Technologies
Can any of the company-specific risk be diversified away by investing in both Ehang Holdings and BWX Technologies 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 Ehang Holdings and BWX Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ehang Holdings and BWX Technologies, you can compare the effects of market volatilities on Ehang Holdings and BWX Technologies 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 Ehang Holdings with a short position of BWX Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ehang Holdings and BWX Technologies.
Diversification Opportunities for Ehang Holdings and BWX Technologies
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ehang and BWX is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ehang Holdings and BWX Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BWX Technologies and Ehang Holdings 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 Ehang Holdings are associated (or correlated) with BWX Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BWX Technologies has no effect on the direction of Ehang Holdings i.e., Ehang Holdings and BWX Technologies go up and down completely randomly.
Pair Corralation between Ehang Holdings and BWX Technologies
Allowing for the 90-day total investment horizon Ehang Holdings is expected to generate 3.81 times more return on investment than BWX Technologies. However, Ehang Holdings is 3.81 times more volatile than BWX Technologies. It trades about 0.05 of its potential returns per unit of risk. BWX Technologies is currently generating about 0.11 per unit of risk. If you would invest 768.00 in Ehang Holdings on August 24, 2024 and sell it today you would earn a total of 638.00 from holding Ehang Holdings or generate 83.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ehang Holdings vs. BWX Technologies
Performance |
| Timeline |
| Ehang Holdings |
| BWX Technologies |
Ehang Holdings and BWX Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ehang Holdings and BWX Technologies
The main advantage of trading using opposite Ehang Holdings and BWX Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ehang Holdings position performs unexpectedly, BWX Technologies 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 BWX Technologies will offset losses from the drop in BWX Technologies' long position.| Ehang Holdings vs. Archer Aviation | Ehang Holdings vs. Vertical Aerospace | Ehang Holdings vs. Rocket Lab USA | Ehang Holdings vs. Lilium NV |
| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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