Correlation Between Global Ship and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Global Ship and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Babcock Wilcox.
Diversification Opportunities for Global Ship and Babcock Wilcox
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Babcock is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease 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 Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Global Ship and Babcock Wilcox
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.24 times more return on investment than Babcock Wilcox. However, Global Ship Lease is 4.17 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 2,138 in Global Ship Lease on November 2, 2024 and sell it today you would earn a total of 502.00 from holding Global Ship Lease or generate 23.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Global Ship Lease |
| Babcock Wilcox Enter |
Global Ship and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Babcock Wilcox
The main advantage of trading using opposite Global Ship and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
| Babcock Wilcox vs. Atlanticus Holdings Corp | Babcock Wilcox vs. Costamare | Babcock Wilcox vs. Alta Equipment Group | Babcock Wilcox vs. Global Ship Lease |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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