Correlation Between Gorman Rupp and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Gorman Rupp 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 Gorman Rupp and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gorman Rupp and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Gorman Rupp 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 Gorman Rupp with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gorman Rupp and Babcock Wilcox.
Diversification Opportunities for Gorman Rupp and Babcock Wilcox
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gorman and Babcock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gorman Rupp 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 Gorman Rupp 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 Gorman Rupp 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 Gorman Rupp i.e., Gorman Rupp and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Gorman Rupp and Babcock Wilcox
Considering the 90-day investment horizon Gorman Rupp is expected to generate 0.3 times more return on investment than Babcock Wilcox. However, Gorman Rupp is 3.38 times less risky than Babcock Wilcox. It trades about 0.07 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.21 per unit of risk. If you would invest 3,746 in Gorman Rupp on November 18, 2024 and sell it today you would earn a total of 65.00 from holding Gorman Rupp or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gorman Rupp vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Gorman Rupp |
| Babcock Wilcox Enter |
Gorman Rupp and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gorman Rupp and Babcock Wilcox
The main advantage of trading using opposite Gorman Rupp and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gorman Rupp 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.| Gorman Rupp vs. Standex International | Gorman Rupp vs. Franklin Electric Co | Gorman Rupp vs. Omega Flex | Gorman Rupp vs. China Yuchai International |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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