Correlation Between Babcock Wilcox and Roma Green

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

Diversification Opportunities for Babcock Wilcox and Roma Green

0.77

Correlation Coefficient

Babcock Wilcox  Roma Green

Poor diversification

The 3 months correlation between Babcock and Roma is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Roma Green go up and down completely randomly.

Pair Corralation between Babcock Wilcox and Roma Green

Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to generate 1.14 times more return on investment than Roma Green. However, Babcock Wilcox is 1.14 times more volatile than Roma Green Finance. It trades about -0.06 of its potential returns per unit of risk. Roma Green Finance is currently generating about -0.1 per unit of risk. If you would invest  226.00  in Babcock Wilcox Enterprises on October 6, 2024 and sell it today you would lose (48.00) from holding Babcock Wilcox Enterprises or give up 21.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Babcock Wilcox Enterprises  vs.  Roma Green Finance

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

Roma Green Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roma Green Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Babcock Wilcox and Roma Green

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

The idea behind Babcock Wilcox Enterprises and Roma Green Finance 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..