Correlation Between Badger Meter and Belden

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Can any of the company-specific risk be diversified away by investing in both Badger Meter 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 Badger Meter and Belden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Badger Meter and Belden Inc, you can compare the effects of market volatilities on Badger Meter 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 Badger Meter with a short position of Belden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Badger Meter and Belden.

Diversification Opportunities for Badger Meter and Belden

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Badger and Belden is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Badger Meter and Belden Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belden Inc and Badger Meter 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 Badger Meter 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 Badger Meter i.e., Badger Meter and Belden go up and down completely randomly.

Pair Corralation between Badger Meter and Belden

Considering the 90-day investment horizon Badger Meter is expected to under-perform the Belden. But the stock apears to be less risky and, when comparing its historical volatility, Badger Meter is 1.21 times less risky than Belden. The stock trades about -0.06 of its potential returns per unit of risk. The Belden Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  8,038  in Belden Inc on December 19, 2023 and sell it today you would earn a total of  646.00  from holding Belden Inc or generate 8.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Badger Meter  vs.  Belden Inc

 Performance 
       Timeline  
Badger Meter 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Badger Meter has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Badger Meter is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.
Belden Inc 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Belden Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Belden exhibited solid returns over the last few months and may actually be approaching a breakup point.

Badger Meter and Belden Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Badger Meter and Belden

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

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