Correlation Between Kimball Electronics and Babcock Wilcox
Can any of the company-specific risk be diversified away by investing in both Kimball Electronics 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 Kimball Electronics and Babcock Wilcox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kimball Electronics and Babcock Wilcox Enterprises, you can compare the effects of market volatilities on Kimball Electronics 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 Kimball Electronics with a short position of Babcock Wilcox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kimball Electronics and Babcock Wilcox.
Diversification Opportunities for Kimball Electronics and Babcock Wilcox
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kimball and Babcock is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kimball Electronics 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 Kimball Electronics 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 Kimball Electronics 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 Kimball Electronics i.e., Kimball Electronics and Babcock Wilcox go up and down completely randomly.
Pair Corralation between Kimball Electronics and Babcock Wilcox
Allowing for the 90-day total investment horizon Kimball Electronics is expected to generate 0.37 times more return on investment than Babcock Wilcox. However, Kimball Electronics is 2.72 times less risky than Babcock Wilcox. It trades about 0.01 of its potential returns per unit of risk. Babcock Wilcox Enterprises is currently generating about -0.03 per unit of risk. If you would invest 2,067 in Kimball Electronics on January 24, 2024 and sell it today you would earn a total of 22.00 from holding Kimball Electronics or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Kimball Electronics vs. Babcock Wilcox Enterprises
Performance |
| Timeline |
| Kimball Electronics |
| Babcock Wilcox Enter |
Kimball Electronics and Babcock Wilcox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kimball Electronics and Babcock Wilcox
The main advantage of trading using opposite Kimball Electronics and Babcock Wilcox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kimball Electronics 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.| Kimball Electronics vs. Hayward Holdings | Kimball Electronics vs. Hollysys Automation Technologies | Kimball Electronics vs. Enersys | Kimball Electronics vs. Espey Mfg Electronics |
| Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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