Correlation Between Babcock Wilcox and Corporacion America

Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Corporacion America 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 Corporacion America 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 Corporacion America Airports, you can compare the effects of market volatilities on Babcock Wilcox and Corporacion America 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 Corporacion America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Corporacion America.

Diversification Opportunities for Babcock Wilcox and Corporacion America

-0.47

Correlation Coefficient

Babcock Wilcox  Corporacion America

Very good diversification

The 3 months correlation between Babcock and Corporacion is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Corporacion America Airports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporacion America 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 Corporacion America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporacion America has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Corporacion America go up and down completely randomly.

Pair Corralation between Babcock Wilcox and Corporacion America

Allowing for the 90-day total investment horizon Babcock Wilcox is expected to generate 23.87 times less return on investment than Corporacion America. In addition to that, Babcock Wilcox is 3.27 times more volatile than Corporacion America Airports. It trades about 0.0 of its total potential returns per unit of risk. Corporacion America Airports is currently generating about 0.06 per unit of volatility. If you would invest  1,382  in Corporacion America Airports on October 4, 2024 and sell it today you would earn a total of  544.00  from holding Corporacion America Airports or generate 39.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Babcock Wilcox Enterprises  vs.  Corporacion America Airports

Babcock Wilcox Enter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Babcock Wilcox Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Corporacion America

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Babcock Wilcox and Corporacion America

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

The idea behind Babcock Wilcox Enterprises and Corporacion America Airports 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..