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Correlation Between Babcock Wilcox and DOW

Analyzing existing cross correlation between Babcock Wilcox Enterprises I and DOW. You can compare the effects of market volatilities on Babcock Wilcox and DOW 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 Babcock Wilcox with a short position of DOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and DOW.

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Diversification Opportunities for Babcock Wilcox and DOW

Babcock Wilcox Enterprises I diversification synergy
0.8
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DOW

Very poor diversification

The 3 months correlation between Babcock and DOW is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises I and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW 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 I are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Babcock Wilcox i.e. Babcock Wilcox and DOW go up and down completely randomly.
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Pair Corralation between Babcock Wilcox and DOW

Allowing for the 30-days total investment horizon, Babcock Wilcox Enterprises I is expected to generate 4.29 times more return on investment than DOW. However, Babcock Wilcox is 4.29 times more volatile than DOW. It trades about 0.15 of its potential returns per unit of risk. DOW is currently generating about 0.07 per unit of risk. If you would invest  348.00  in Babcock Wilcox Enterprises I on January 23, 2020 and sell it today you would earn a total of  117.00  from holding Babcock Wilcox Enterprises I or generate 33.62% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Babcock Wilcox Enterprises I  vs.  DOW

 Performance (%) 
    
  Timeline 
 Predicted Return Density 
    
  Returns 
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