Correlation Between Walker Dunlop and Babcock Wilcox

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

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

Diversification Opportunities for Walker Dunlop and Babcock Wilcox

0.46

Correlation Coefficient

Walker Dunlop  Babcock Wilcox

Very weak diversification

The 3 months correlation between Walker and Babcock is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop 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 Walker Dunlop 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 Walker Dunlop 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 Walker Dunlop i.e., Walker Dunlop and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Walker Dunlop and Babcock Wilcox

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 1.8 times less return on investment than Babcock Wilcox. In addition to that, Walker Dunlop is 1.86 times more volatile than Babcock Wilcox Enterprises,. It trades about 0.04 of its total potential returns per unit of risk. Babcock Wilcox Enterprises, is currently generating about 0.15 per unit of volatility. If you would invest  2,180  in Babcock Wilcox Enterprises, on September 12, 2024 and sell it today you would earn a total of  180.00  from holding Babcock Wilcox Enterprises, or generate 8.26% return on investment over 90 days.

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

Walker Dunlop  vs.  Babcock Wilcox Enterprises,

Walker Dunlop

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walker Dunlop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Babcock Wilcox Enter

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock Wilcox Enterprises, are ranked lower than 11 (%) 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.

Pair Trading with Walker Dunlop and Babcock Wilcox

The main advantage of trading using opposite Walker Dunlop and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walker Dunlop 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 Walker Dunlop 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.