Correlation Between Babcock Wilcox and B Riley

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

Diversification Opportunities for Babcock Wilcox and B Riley

-0.12

Correlation Coefficient

Babcock Wilcox  B Riley

Good diversification

The 3 months correlation between Babcock and RILYT is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and B Riley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Riley Financial 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 B Riley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Riley Financial has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and B Riley go up and down completely randomly.

Pair Corralation between Babcock Wilcox and B Riley

Given the investment horizon of 90 days Babcock Wilcox Enterprises is expected to generate 0.52 times more return on investment than B Riley. However, Babcock Wilcox Enterprises is 1.92 times less risky than B Riley. It trades about 0.03 of its potential returns per unit of risk. B Riley Financial is currently generating about 0.0 per unit of risk. If you would invest  1,720  in Babcock Wilcox Enterprises on September 1, 2024 and sell it today you would earn a total of  440.00  from holding Babcock Wilcox Enterprises or generate 25.58% 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.  B Riley Financial

Babcock Wilcox Enter

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock Wilcox Enterprises are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Babcock Wilcox may actually be approaching a critical reversion point that can send shares even higher in December 2024.

B Riley Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in B Riley Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, B Riley unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Babcock Wilcox and B Riley

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

The idea behind Babcock Wilcox Enterprises and B Riley Financial 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.