Correlation Between BWX Technologies and Astronics

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

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

Diversification Opportunities for BWX Technologies and Astronics

-0.65

Correlation Coefficient

BWX Technologies  Astronics

Excellent diversification

The 3 months correlation between BWX and Astronics is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BWX Technologies and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and BWX Technologies 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 BWX Technologies are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of BWX Technologies i.e., BWX Technologies and Astronics go up and down completely randomly.

Pair Corralation between BWX Technologies and Astronics

Given the investment horizon of 90 days BWX Technologies is expected to generate 0.53 times more return on investment than Astronics. However, BWX Technologies is 1.88 times less risky than Astronics. It trades about 0.2 of its potential returns per unit of risk. Astronics is currently generating about -0.05 per unit of risk. If you would invest  9,827  in BWX Technologies on September 12, 2024 and sell it today you would earn a total of  2,383  from holding BWX Technologies or generate 24.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BWX Technologies  vs.  Astronics

BWX Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BWX Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, BWX Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Astronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with BWX Technologies and Astronics

The main advantage of trading using opposite BWX Technologies and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BWX Technologies position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.

The idea behind BWX Technologies and Astronics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..