Correlation Between Chart Industries and Babcock Wilcox

Can any of the company-specific risk be diversified away by investing in both Chart Industries and Babcock Wilcox 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 Chart Industries and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chart Industries and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Chart Industries and Babcock Wilcox 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 Chart Industries with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and Babcock Wilcox.

Diversification Opportunities for Chart Industries and Babcock Wilcox

0.72

Correlation Coefficient

Chart Industries  Babcock Wilcox

Poor diversification

The 3 months correlation between Chart and Babcock is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Babcock Wilcox Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock Wilcox Enter and Chart Industries 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 Chart Industries are associated (or correlated) with Babcock Wilcox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock Wilcox Enter has no effect on the direction of Chart Industries i.e., Chart Industries and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Chart Industries and Babcock Wilcox

Given the investment horizon of 90 days Chart Industries is expected to generate 1.43 times more return on investment than Babcock Wilcox. However, Chart Industries is 1.43 times more volatile than Babcock Wilcox Enterprises. It trades about -0.08 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.19 per unit of risk. If you would invest  19,059  in Chart Industries on December 29, 2024 and sell it today you would lose (3,696) from holding Chart Industries or give up 19.39% of portfolio value over 90 days.

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

Chart Industries  vs.  Babcock Wilcox Enterprises

Chart Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chart Industries 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 essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. Despite weak performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chart Industries and Babcock Wilcox

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

The idea behind Chart Industries and Babcock Wilcox Enterprises 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.