Correlation Between Babcock Wilcox and JBTMarel Corp

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

Diversification Opportunities for Babcock Wilcox and JBTMarel Corp

-0.2

Correlation Coefficient

Babcock Wilcox  JBTMarel Corp

Good diversification

The 3 months correlation between Babcock and JBTMarel is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and JBTMarel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBTMarel Corp 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 JBTMarel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBTMarel Corp has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and JBTMarel Corp go up and down completely randomly.

Pair Corralation between Babcock Wilcox and JBTMarel Corp

Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the JBTMarel Corp. In addition to that, Babcock Wilcox is 1.64 times more volatile than JBTMarel Corp. It trades about -0.2 of its total potential returns per unit of risk. JBTMarel Corp is currently generating about 0.02 per unit of volatility. If you would invest  12,469  in JBTMarel Corp on December 20, 2024 and sell it today you would earn a total of  171.00  from holding JBTMarel Corp or generate 1.37% return on investment over 90 days.

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

Babcock Wilcox Enterprises  vs.  JBTMarel Corp

Babcock Wilcox Enter

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

JBTMarel Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JBTMarel Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, JBTMarel Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Babcock Wilcox and JBTMarel Corp

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

The idea behind Babcock Wilcox Enterprises and JBTMarel Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.