Correlation Between Presidio Property and Babcock Wilcox

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

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

Diversification Opportunities for Presidio Property and Babcock Wilcox

0.07

Correlation Coefficient

Presidio Property  Babcock Wilcox

Significant diversification

The 3 months correlation between Presidio and Babcock is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Presidio Property Trust 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 Presidio Property 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 Presidio Property Trust 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 Presidio Property i.e., Presidio Property and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Presidio Property and Babcock Wilcox

Assuming the 90 days horizon Presidio Property Trust is expected to under-perform the Babcock Wilcox. But the preferred stock apears to be less risky and, when comparing its historical volatility, Presidio Property Trust is 1.69 times less risky than Babcock Wilcox. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Babcock Wilcox Enterprises is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,370  in Babcock Wilcox Enterprises on September 1, 2024 and sell it today you would earn a total of  40.00  from holding Babcock Wilcox Enterprises or generate 2.92% return on investment over 90 days.

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

Presidio Property Trust  vs.  Babcock Wilcox Enterprises

Presidio Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Presidio Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Babcock Wilcox Enter

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock Wilcox Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Babcock Wilcox is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Presidio Property and Babcock Wilcox

The main advantage of trading using opposite Presidio Property and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Presidio Property 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 Presidio Property Trust 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.