Correlation Between Hochschild Mining and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining 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 Hochschild Mining and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hochschild Mining PLC and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Hochschild Mining 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 Hochschild Mining with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Babcock Wilcox.
Diversification Opportunities for Hochschild Mining and Babcock Wilcox
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hochschild and Babcock is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining PLC 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 Hochschild Mining 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 Hochschild Mining PLC 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 Hochschild Mining i.e., Hochschild Mining and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Hochschild Mining and Babcock Wilcox
Assuming the 90 days horizon Hochschild Mining PLC is expected to under-perform the Babcock Wilcox. In addition to that, Hochschild Mining is 2.41 times more volatile than Babcock Wilcox Enterprises. It trades about -0.08 of its total potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.12 per unit of volatility. If you would invest 2,193 in Babcock Wilcox Enterprises on October 25, 2024 and sell it today you would lose (258.00) from holding Babcock Wilcox Enterprises or give up 11.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Hochschild Mining PLC vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Hochschild Mining PLC |
| Babcock Wilcox Enter |
Hochschild Mining and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and Babcock Wilcox
The main advantage of trading using opposite Hochschild Mining and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining 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.| Hochschild Mining vs. Radisson Mining Resources | Hochschild Mining vs. Big Ridge Gold | Hochschild Mining vs. Cerrado Gold | Hochschild Mining vs. Orogen Royalties |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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