Correlation Between Dupont De and Babcock Wilcox

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

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

Diversification Opportunities for Dupont De and Babcock Wilcox

-0.49

Correlation Coefficient

Dupont De  Babcock Wilcox

Very good diversification

The 3 months correlation between Dupont and Babcock is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours 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 Dupont De 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 Dupont De Nemours 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 Dupont De i.e., Dupont De and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Dupont De and Babcock Wilcox

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 0.21 times more return on investment than Babcock Wilcox. However, Dupont De Nemours is 4.87 times less risky than Babcock Wilcox. It trades about -0.21 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.05 per unit of risk. If you would invest  7,720  in Dupont De Nemours on January 29, 2024 and sell it today you would lose (349.00) from holding Dupont De Nemours or give up 4.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Dupont De Nemours  vs.  Babcock Wilcox Enterprises

Dupont De Nemours

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Dupont De exhibited solid returns over the last few months and may actually be approaching a breakup point.

Babcock Wilcox Enter

Risk-Adjusted Performance

0 of 100

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 latest inconsistent performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Dupont De and Babcock Wilcox

The main advantage of trading using opposite Dupont De and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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 Dupont De Nemours 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.