Correlation Between Thermon Group and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Thermon Group 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 Thermon Group and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermon Group Holdings and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Thermon Group 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 Thermon Group with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and Babcock Wilcox.
Diversification Opportunities for Thermon Group and Babcock Wilcox
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thermon and Babcock is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings 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 Thermon Group 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 Thermon Group Holdings 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 Thermon Group i.e., Thermon Group and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Thermon Group and Babcock Wilcox
Considering the 90-day investment horizon Thermon Group Holdings is expected to generate 0.35 times more return on investment than Babcock Wilcox. However, Thermon Group Holdings is 2.9 times less risky than Babcock Wilcox. It trades about 0.05 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about 0.0 per unit of risk. If you would invest 2,037 in Thermon Group Holdings on August 26, 2024 and sell it today you would earn a total of 1,160 from holding Thermon Group Holdings or generate 56.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermon Group Holdings vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Thermon Group Holdings |
| Babcock Wilcox Enter |
Thermon Group and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermon Group and Babcock Wilcox
The main advantage of trading using opposite Thermon Group and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermon Group 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.| Thermon Group vs. Hurco Companies | Thermon Group vs. Enerpac Tool Group | Thermon Group vs. Enpro Industries | Thermon Group vs. Omega Flex |
| Babcock Wilcox vs. Barnes Group | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Hillenbrand | Babcock Wilcox vs. Ingersoll Rand |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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