Correlation Between Hillenbrand and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Hillenbrand 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 Hillenbrand and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillenbrand and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Hillenbrand 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 Hillenbrand with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillenbrand and Babcock Wilcox.
Diversification Opportunities for Hillenbrand and Babcock Wilcox
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hillenbrand and Babcock is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hillenbrand 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 Hillenbrand 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 Hillenbrand 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 Hillenbrand i.e., Hillenbrand and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Hillenbrand and Babcock Wilcox
Allowing for the 90-day total investment horizon Hillenbrand is expected to generate 0.31 times more return on investment than Babcock Wilcox. However, Hillenbrand is 3.22 times less risky than Babcock Wilcox. It trades about -0.02 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.12 per unit of risk. If you would invest 4,960 in Hillenbrand on January 26, 2024 and sell it today you would lose (42.00) from holding Hillenbrand or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Hillenbrand vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Hillenbrand |
| Babcock Wilcox Enter |
Hillenbrand and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hillenbrand and Babcock Wilcox
The main advantage of trading using opposite Hillenbrand and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillenbrand 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.| Hillenbrand vs. Emerson Electric | Hillenbrand vs. Smith AO | Hillenbrand vs. Eaton PLC | Hillenbrand vs. Cummins |
| Babcock Wilcox vs. Pioneer Power Solutions | Babcock Wilcox vs. CBAK Energy Technology | Babcock Wilcox vs. Ideal Power | Babcock Wilcox vs. Expion360 |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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