Correlation Between Nano Nuclear and Babcock Wilcox

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

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

Diversification Opportunities for Nano Nuclear and Babcock Wilcox

-0.41

Correlation Coefficient

Nano Nuclear  Babcock Wilcox

Very good diversification

The 3 months correlation between Nano and Babcock is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nano Nuclear Energy 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 Nano Nuclear 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 Nano Nuclear Energy 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 Nano Nuclear i.e., Nano Nuclear and Babcock Wilcox go up and down completely randomly.

Pair Corralation between Nano Nuclear and Babcock Wilcox

Considering the 90-day investment horizon Nano Nuclear Energy is expected to generate 5.51 times more return on investment than Babcock Wilcox. However, Nano Nuclear is 5.51 times more volatile than Babcock Wilcox Enterprises. It trades about 0.11 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.06 per unit of risk. If you would invest  1,759  in Nano Nuclear Energy on September 13, 2024 and sell it today you would earn a total of  577.00  from holding Nano Nuclear Energy or generate 32.8% return on investment over 90 days.

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

Nano Nuclear Energy  vs.  Babcock Wilcox Enterprises

Nano Nuclear Energy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Nuclear Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Nano Nuclear 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. Despite somewhat strong basic indicators, Babcock Wilcox is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nano Nuclear and Babcock Wilcox

The main advantage of trading using opposite Nano Nuclear and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano Nuclear 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 Nano Nuclear Energy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.