Correlation Between SNC Lavalin and Babcock International
Can any of the company-specific risk be diversified away by investing in both SNC Lavalin 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 SNC Lavalin and Babcock International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNC Lavalin Group and Babcock International Group, you can compare the effects of market volatilities on SNC Lavalin 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 SNC Lavalin with a short position of Babcock International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNC Lavalin and Babcock International.
Diversification Opportunities for SNC Lavalin and Babcock International
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between SNC and Babcock is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SNC Lavalin Group and Babcock International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock International and SNC Lavalin 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 SNC Lavalin Group 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 SNC Lavalin i.e., SNC Lavalin and Babcock International go up and down completely randomly.
Pair Corralation between SNC Lavalin and Babcock International
Assuming the 90 days horizon SNC Lavalin Group is expected to generate 0.66 times more return on investment than Babcock International. However, SNC Lavalin Group is 1.51 times less risky than Babcock International. It trades about 0.11 of its potential returns per unit of risk. Babcock International Group is currently generating about 0.06 per unit of risk. If you would invest 2,030 in SNC Lavalin Group on August 31, 2024 and sell it today you would earn a total of 3,255 from holding SNC Lavalin Group or generate 160.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.09% |
| Values | Daily Returns |
SNC Lavalin Group vs. Babcock International Group
Performance |
| Timeline |
| SNC Lavalin Group |
| Babcock International |
SNC Lavalin and Babcock International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNC Lavalin and Babcock International
The main advantage of trading using opposite SNC Lavalin and Babcock International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNC Lavalin 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.| SNC Lavalin vs. Aecon Group | SNC Lavalin vs. Acciona SA | SNC Lavalin vs. WSP Global | SNC Lavalin vs. SIG Combibloc Group |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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