Correlation Between NWS Holdings and Babcock International
Can any of the company-specific risk be diversified away by investing in both NWS Holdings and Babcock International 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 NWS Holdings and Babcock International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NWS Holdings Limited and Babcock International Group, you can compare the effects of market volatilities on NWS Holdings and Babcock International 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 NWS Holdings with a short position of Babcock International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NWS Holdings and Babcock International.
Diversification Opportunities for NWS Holdings and Babcock International
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between NWS and Babcock is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NWS Holdings Limited and Babcock International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock International and NWS 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 NWS Holdings Limited are associated (or correlated) with Babcock International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock International has no effect on the direction of NWS Holdings i.e., NWS Holdings and Babcock International go up and down completely randomly.
Pair Corralation between NWS Holdings and Babcock International
Assuming the 90 days horizon NWS Holdings Limited is expected to generate 1.46 times more return on investment than Babcock International. However, NWS Holdings is 1.46 times more volatile than Babcock International Group. It trades about 0.11 of its potential returns per unit of risk. Babcock International Group is currently generating about 0.05 per unit of risk. If you would invest 26.00 in NWS Holdings Limited on August 29, 2024 and sell it today you would earn a total of 69.00 from holding NWS Holdings Limited or generate 265.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.84% |
| Values | Daily Returns |
NWS Holdings Limited vs. Babcock International Group
Performance |
| Timeline |
| NWS Holdings Limited |
| Babcock International |
NWS Holdings and Babcock International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NWS Holdings and Babcock International
The main advantage of trading using opposite NWS Holdings and Babcock International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NWS Holdings position performs unexpectedly, Babcock International 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 International will offset losses from the drop in Babcock International's long position.| NWS Holdings vs. Babcock International Group | NWS Holdings vs. Tcnicas Reunidas SA | NWS Holdings vs. Shimizu Corp ADR | NWS Holdings vs. Obayashi |
| Babcock International vs. Arcadis NV | Babcock International vs. KBR Inc | Babcock International vs. Orion Group Holdings | Babcock International vs. Jacobs Solutions |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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