Correlation Between QEP and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both QEP 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 QEP and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QEP Co Inc and Babcock Wilcox Enterprises,, you can compare the effects of market volatilities on QEP 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 QEP with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of QEP and Babcock Wilcox.
Diversification Opportunities for QEP and Babcock Wilcox
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between QEP and Babcock is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding QEP Co Inc 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 QEP 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 QEP Co Inc 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 QEP i.e., QEP and Babcock Wilcox go up and down completely randomly.
Pair Corralation between QEP and Babcock Wilcox
Given the investment horizon of 90 days QEP Co Inc is expected to generate 2.65 times more return on investment than Babcock Wilcox. However, QEP is 2.65 times more volatile than Babcock Wilcox Enterprises,. It trades about 0.06 of its potential returns per unit of risk. Babcock Wilcox Enterprises, is currently generating about 0.03 per unit of risk. If you would invest 1,222 in QEP Co Inc on August 31, 2024 and sell it today you would earn a total of 76.00 from holding QEP Co Inc or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 8.56% |
| Values | Daily Returns |
QEP Co Inc vs. Babcock Wilcox Enterprises,
Performance |
| Timeline |
| QEP Co Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Babcock Wilcox Enter |
QEP and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QEP and Babcock Wilcox
The main advantage of trading using opposite QEP and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QEP 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.The idea behind QEP Co Inc and Babcock Wilcox Enterprises, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Babcock Wilcox vs. Cemex SAB de | Babcock Wilcox vs. Sinosteel Luonai Materials | Babcock Wilcox vs. Shandong Longquan Pipeline | Babcock Wilcox vs. CRH PLC ADR |
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.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |