Correlation Between FitLife Brands, and Babcock Wilcox

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

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

Diversification Opportunities for FitLife Brands, and Babcock Wilcox

-0.43

Correlation Coefficient

FitLife Brands,  Babcock Wilcox

Very good diversification

The 3 months correlation between FitLife and Babcock is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding FitLife Brands, Common 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 FitLife Brands, 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 FitLife Brands, Common 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 FitLife Brands, i.e., FitLife Brands, and Babcock Wilcox go up and down completely randomly.

Pair Corralation between FitLife Brands, and Babcock Wilcox

Given the investment horizon of 90 days FitLife Brands, is expected to generate 7.31 times less return on investment than Babcock Wilcox. In addition to that, FitLife Brands, is 1.79 times more volatile than Babcock Wilcox Enterprises. It trades about 0.01 of its total potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about 0.18 per unit of volatility. If you would invest  1,885  in Babcock Wilcox Enterprises on September 4, 2024 and sell it today you would earn a total of  260.00  from holding Babcock Wilcox Enterprises or generate 13.79% return on investment over 90 days.

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

FitLife Brands, Common  vs.  Babcock Wilcox Enterprises

FitLife Brands, Common

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FitLife Brands, Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, FitLife Brands, is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Babcock Wilcox Enter

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock Wilcox Enterprises are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Babcock Wilcox sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FitLife Brands, and Babcock Wilcox

The main advantage of trading using opposite FitLife Brands, and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FitLife Brands, 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 FitLife Brands, Common 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.