Correlation Between Babcock Wilcox and SIMPPLE
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and SIMPPLE 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 SIMPPLE 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 SIMPPLE LTD Ordinary, you can compare the effects of market volatilities on Babcock Wilcox and SIMPPLE 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 SIMPPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and SIMPPLE.
Diversification Opportunities for Babcock Wilcox and SIMPPLE
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Babcock and SIMPPLE is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and SIMPPLE LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMPPLE LTD Ordinary 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 SIMPPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMPPLE LTD Ordinary has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and SIMPPLE go up and down completely randomly.
Pair Corralation between Babcock Wilcox and SIMPPLE
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to under-perform the SIMPPLE. But the stock apears to be less risky and, when comparing its historical volatility, Babcock Wilcox Enterprises is 6.7 times less risky than SIMPPLE. The stock trades about -0.03 of its potential returns per unit of risk. The SIMPPLE LTD Ordinary is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 39.00 in SIMPPLE LTD Ordinary on September 5, 2024 and sell it today you would earn a total of 56.20 from holding SIMPPLE LTD Ordinary or generate 144.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Babcock Wilcox Enterprises vs. SIMPPLE LTD Ordinary
Performance |
Timeline |
Babcock Wilcox Enter |
SIMPPLE LTD Ordinary |
Babcock Wilcox and SIMPPLE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Babcock Wilcox and SIMPPLE
The main advantage of trading using opposite Babcock Wilcox and SIMPPLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, SIMPPLE 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 SIMPPLE will offset losses from the drop in SIMPPLE's long position.Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
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Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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