Correlation Between SunOpta and Babcock Wilcox

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

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

Diversification Opportunities for SunOpta and Babcock Wilcox

-0.04

Correlation Coefficient

SunOpta  Babcock Wilcox

Good diversification

The 3 months correlation between SunOpta and Babcock is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta 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 SunOpta 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 SunOpta 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 SunOpta i.e., SunOpta and Babcock Wilcox go up and down completely randomly.

Pair Corralation between SunOpta and Babcock Wilcox

Given the investment horizon of 90 days SunOpta is expected to under-perform the Babcock Wilcox. In addition to that, SunOpta is 1.26 times more volatile than Babcock Wilcox Enterprises. It trades about -0.12 of its total potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about 0.0 per unit of volatility. If you would invest  2,104  in Babcock Wilcox Enterprises on December 1, 2024 and sell it today you would lose (29.00) from holding Babcock Wilcox Enterprises or give up 1.38% of portfolio value over 90 days.

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

SunOpta  vs.  Babcock Wilcox Enterprises

SunOpta

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional 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 somewhat strong basic indicators, Babcock Wilcox is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SunOpta and Babcock Wilcox

The main advantage of trading using opposite SunOpta and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta 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 SunOpta 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.