Two Equities Correlation Analysis
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This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.
Diversification Opportunities for Babcock Wilcox and NYSE Composite
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and NYSE is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Babcock Wilcox 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 Babcock Wilcox Enterprises are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and NYSE Composite go up and down completely randomly.
Pair Corralation between Babcock Wilcox and NYSE Composite
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the NYSE Composite. In addition to that, Babcock Wilcox is 7.66 times more volatile than NYSE Composite. It trades about -0.03 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.07 per unit of volatility. If you would invest 1,474,703 in NYSE Composite on January 24, 2024 and sell it today you would earn a total of 304,573 from holding NYSE Composite or generate 20.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. NYSE Composite
Performance |
| Timeline |
Babcock Wilcox and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
Babcock Wilcox Enterprises
Pair trading matchups for Babcock Wilcox
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Babcock Wilcox and NYSE Composite
The main advantage of trading using opposite Babcock Wilcox and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.| Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
| NYSE Composite vs. The Wendys Co | NYSE Composite vs. Dine Brands Global | NYSE Composite vs. BJs Restaurants | NYSE Composite vs. Rave Restaurant Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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