Correlation Between Babcock Wilcox and Ramaco Resources,

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

Diversification Opportunities for Babcock Wilcox and Ramaco Resources,

0.6

Correlation Coefficient

Babcock Wilcox  Ramaco Resources,

Poor diversification

The 3 months correlation between Babcock and Ramaco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises, and Ramaco Resources, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramaco Resources, 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 Ramaco Resources,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramaco Resources, has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Ramaco Resources, go up and down completely randomly.

Pair Corralation between Babcock Wilcox and Ramaco Resources,

Given the investment horizon of 90 days Babcock Wilcox Enterprises, is expected to generate 1.75 times more return on investment than Ramaco Resources,. However, Babcock Wilcox is 1.75 times more volatile than Ramaco Resources, . It trades about 0.14 of its potential returns per unit of risk. Ramaco Resources, is currently generating about 0.01 per unit of risk. If you would invest  2,218  in Babcock Wilcox Enterprises, on September 16, 2024 and sell it today you would earn a total of  170.00  from holding Babcock Wilcox Enterprises, or generate 7.66% return on investment over 90 days.

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

Babcock Wilcox Enterprises,  vs.  Ramaco Resources,

Babcock Wilcox Enter

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock Wilcox Enterprises, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Babcock Wilcox may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ramaco Resources,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ramaco Resources, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Ramaco Resources, is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Babcock Wilcox and Ramaco Resources,

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

The idea behind Babcock Wilcox Enterprises, and Ramaco Resources, 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.