Correlation Between Rolls-Royce Holdings and BWX Technologies
Can any of the company-specific risk be diversified away by investing in both Rolls-Royce Holdings and BWX Technologies 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 Rolls-Royce Holdings and BWX Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rolls Royce Holdings plc and BWX Technologies, you can compare the effects of market volatilities on Rolls-Royce Holdings and BWX Technologies 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 Rolls-Royce Holdings with a short position of BWX Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rolls-Royce Holdings and BWX Technologies.
Diversification Opportunities for Rolls-Royce Holdings and BWX Technologies
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rolls-Royce and BWX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rolls Royce Holdings plc and BWX Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BWX Technologies and Rolls-Royce 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 Rolls Royce Holdings plc are associated (or correlated) with BWX Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BWX Technologies has no effect on the direction of Rolls-Royce Holdings i.e., Rolls-Royce Holdings and BWX Technologies go up and down completely randomly.
Pair Corralation between Rolls-Royce Holdings and BWX Technologies
Assuming the 90 days horizon Rolls Royce Holdings plc is expected to under-perform the BWX Technologies. In addition to that, Rolls-Royce Holdings is 2.74 times more volatile than BWX Technologies. It trades about -0.02 of its total potential returns per unit of risk. BWX Technologies is currently generating about 0.07 per unit of volatility. If you would invest 6,134 in BWX Technologies on November 27, 2024 and sell it today you would earn a total of 3,856 from holding BWX Technologies or generate 62.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Rolls Royce Holdings plc vs. BWX Technologies
Performance |
| Timeline |
| Rolls Royce Holdings |
| BWX Technologies |
Rolls-Royce Holdings and BWX Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rolls-Royce Holdings and BWX Technologies
The main advantage of trading using opposite Rolls-Royce Holdings and BWX Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rolls-Royce Holdings position performs unexpectedly, BWX Technologies 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 BWX Technologies will offset losses from the drop in BWX Technologies' long position.| Rolls-Royce Holdings vs. Rolls Royce Holdings PLC | Rolls-Royce Holdings vs. VirTra Inc | Rolls-Royce Holdings vs. BWX Technologies | Rolls-Royce Holdings vs. Embraer SA ADR |
| BWX Technologies vs. Hexcel | BWX Technologies vs. Ducommun Incorporated | BWX Technologies vs. Mercury Systems | BWX Technologies vs. Woodward |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |