Correlation Between Babcock Wilcox and Belden

Specify exactly 2 symbols:
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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Babcock Wilcox Enterprises  vs.  Belden Inc

 Performance 
       Timeline  
Babcock Wilcox Enter 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 fairly weak basic indicators, Babcock Wilcox may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Belden Inc 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Belden Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Belden exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Babcock Wilcox Enterprises and Belden Inc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency