Correlation Between Puration and Babcock Wilcox

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

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

Diversification Opportunities for Puration and Babcock Wilcox

0.0

Correlation Coefficient

Puration  Babcock Wilcox

Pay attention - limited upside

The 3 months correlation between Puration and Babcock is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Puration 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 Puration 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 Puration 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 Puration i.e., Puration and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Puration and Babcock Wilcox

Given the investment horizon of 90 days Puration is expected to under-perform the Babcock Wilcox. In addition to that, Puration is 1.98 times more volatile than Babcock Wilcox Enterprises. It trades about -0.01 of its total potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.01 per unit of volatility. If you would invest  653.00  in Babcock Wilcox Enterprises on October 3, 2024 and sell it today you would lose (489.00) from holding Babcock Wilcox Enterprises or give up 74.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Puration  vs.  Babcock Wilcox Enterprises

Puration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Puration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Puration and Babcock Wilcox

The main advantage of trading using opposite Puration and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puration 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 Puration 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.