Correlation Between Babcock Wilcox and Belden
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Belden 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 Babcock Wilcox and Belden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock Wilcox Enterprises and Belden Inc, you can compare the effects of market volatilities on Babcock Wilcox and Belden 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 Babcock Wilcox with a short position of Belden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Belden.
Diversification Opportunities for Babcock Wilcox and Belden
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Babcock and Belden is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc and Babcock Wilcox 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 Babcock Wilcox Enterprises are associated (or correlated) with Belden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belden Inc has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Belden go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Belden
Allowing for the 90-day total investment horizon Babcock Wilcox is expected to generate 1.24 times less return on investment than Belden. In addition to that, Babcock Wilcox is 9.13 times more volatile than Belden Inc. It trades about 0.04 of its total potential returns per unit of risk. Belden Inc is currently generating about 0.4 per unit of volatility. If you would invest 8,383 in Belden Inc on December 29, 2023 and sell it today you would earn a total of 938.00 from holding Belden Inc or generate 11.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Babcock Wilcox Enterprises vs. Belden Inc
Performance |
Timeline |
Babcock Wilcox Enter |
Belden Inc |
Babcock Wilcox and Belden Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Babcock Wilcox and Belden
The main advantage of trading using opposite Babcock Wilcox and Belden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Belden 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 Belden will offset losses from the drop in Belden's long position.Babcock Wilcox vs. Barnes Group | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. General Electric | Babcock Wilcox vs. Hillenbrand |
Belden vs. Kimball Electronics | Belden vs. Ubiquiti Networks | Belden vs. Minim Inc | Belden vs. Moving IMage Technologies |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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