Correlation Between Omega Flex and Babcock Wilcox

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

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

Diversification Opportunities for Omega Flex and Babcock Wilcox

0.17

Correlation Coefficient

Omega Flex  Babcock Wilcox

Average diversification

The 3 months correlation between Omega and Babcock is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Omega Flex 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 Omega Flex 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 Omega Flex 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 Omega Flex i.e., Omega Flex and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Omega Flex and Babcock Wilcox

Given the investment horizon of 90 days Omega Flex is expected to under-perform the Babcock Wilcox. But the stock apears to be less risky and, when comparing its historical volatility, Omega Flex is 4.87 times less risky than Babcock Wilcox. The stock trades about -0.05 of its potential returns per unit of risk. The Babcock Wilcox Enterprises is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Babcock Wilcox Enterprises on February 8, 2024 and sell it today you would lose (15.00) from holding Babcock Wilcox Enterprises or give up 11.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Omega Flex  vs.  Babcock Wilcox Enterprises

Omega Flex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Omega Flex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Omega Flex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Babcock Wilcox Enter

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock Wilcox Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Babcock Wilcox showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Omega Flex and Babcock Wilcox

The main advantage of trading using opposite Omega Flex and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omega Flex 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 Omega Flex 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.