Correlation Between Babcock Wilcox and Ingersoll Rand
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Ingersoll Rand 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 Babcock Wilcox and Ingersoll Rand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock Wilcox Enterprises and Ingersoll Rand, you can compare the effects of market volatilities on Babcock Wilcox and Ingersoll Rand 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 Ingersoll Rand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Ingersoll Rand.
Diversification Opportunities for Babcock Wilcox and Ingersoll Rand
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Babcock and Ingersoll is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand 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 Ingersoll Rand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingersoll Rand has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Ingersoll Rand go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Ingersoll Rand
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to generate 2.7 times more return on investment than Ingersoll Rand. However, Babcock Wilcox is 2.7 times more volatile than Ingersoll Rand. It trades about 0.0 of its potential returns per unit of risk. Ingersoll Rand is currently generating about -0.21 per unit of risk. If you would invest 110.00 in Babcock Wilcox Enterprises on February 6, 2024 and sell it today you would lose (2.00) from holding Babcock Wilcox Enterprises or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Ingersoll Rand
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Ingersoll Rand |
Babcock Wilcox and Ingersoll Rand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Ingersoll Rand
The main advantage of trading using opposite Babcock Wilcox and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Ingersoll Rand 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 Ingersoll Rand will offset losses from the drop in Ingersoll Rand's long position.| Babcock Wilcox vs. Pioneer Power Solutions | Babcock Wilcox vs. CBAK Energy Technology | Babcock Wilcox vs. Ideal Power | Babcock Wilcox vs. Expion360 |
| Ingersoll Rand vs. IDEX Corporation | Ingersoll Rand vs. Flowserve | Ingersoll Rand vs. Donaldson | Ingersoll Rand vs. Franklin Electric Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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