Correlation Between BBAI WT and WBX WT

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

By analyzing existing cross correlation between BBAI WT and WBX WT, you can compare the effects of market volatilities on BBAI WT and WBX WT 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 BBAI WT with a short position of WBX WT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBAI WT and WBX WT.

Diversification Opportunities for BBAI WT and WBX WT

-0.71

Correlation Coefficient

BBAI WT  WBX WT

Pay attention - limited upside

The 3 months correlation between BBAI and WBX is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding BBAI WT and WBX WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WBX WT and BBAI WT 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 BBAI WT are associated (or correlated) with WBX WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WBX WT has no effect on the direction of BBAI WT i.e., BBAI WT and WBX WT go up and down completely randomly.

Pair Corralation between BBAI WT and WBX WT

Assuming the 90 days trading horizon BBAI WT is expected to generate 0.54 times more return on investment than WBX WT. However, BBAI WT is 1.85 times less risky than WBX WT. It trades about 0.49 of its potential returns per unit of risk. WBX WT is currently generating about 0.1 per unit of risk. If you would invest  31.00  in BBAI WT on September 30, 2024 and sell it today you would earn a total of  114.00  from holding BBAI WT or generate 367.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

BBAI WT  vs.  WBX WT

BBAI WT

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BBAI WT are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, BBAI WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

WBX WT

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WBX WT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, WBX WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BBAI WT and WBX WT

The main advantage of trading using opposite BBAI WT and WBX WT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBAI WT position performs unexpectedly, WBX WT 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 WBX WT will offset losses from the drop in WBX WT's long position.

The idea behind BBAI WT and WBX WT 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.