Correlation Between Harrow Health and Babcock Wilcox

Can any of the company-specific risk be diversified away by investing in both Harrow Health 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 Harrow Health and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Harrow Health 8625 and Babcock Wilcox Enterprises,, you can compare the effects of market volatilities on Harrow Health 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 Harrow Health with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harrow Health and Babcock Wilcox.

Diversification Opportunities for Harrow Health and Babcock Wilcox

0.62

Correlation Coefficient

Harrow Health  Babcock Wilcox

Poor diversification

The 3 months correlation between Harrow and Babcock is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Harrow Health 8625 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 Harrow Health 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 Harrow Health 8625 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 Harrow Health i.e., Harrow Health and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Harrow Health and Babcock Wilcox

Assuming the 90 days horizon Harrow Health is expected to generate 1.51 times less return on investment than Babcock Wilcox. But when comparing it to its historical volatility, Harrow Health 8625 is 2.91 times less risky than Babcock Wilcox. It trades about 0.07 of its potential returns per unit of risk. Babcock Wilcox Enterprises, is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,860  in Babcock Wilcox Enterprises, on July 19, 2024 and sell it today you would earn a total of  540.00  from holding Babcock Wilcox Enterprises, or generate 29.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Harrow Health 8625  vs.  Babcock Wilcox Enterprises,

Harrow Health 8625

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harrow Health 8625 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Harrow Health is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Babcock Wilcox Enter

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock Wilcox Enterprises, are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Babcock Wilcox may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Harrow Health and Babcock Wilcox

The main advantage of trading using opposite Harrow Health and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harrow Health 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.

The idea behind Harrow Health 8625 and Babcock Wilcox Enterprises, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.