Correlation Between Barnes and Ingersoll Rand
Can any of the company-specific risk be diversified away by investing in both Barnes and Ingersoll Rand 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 Barnes and Ingersoll Rand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Ingersoll Rand, you can compare the effects of market volatilities on Barnes and Ingersoll Rand 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 Barnes with a short position of Ingersoll Rand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Ingersoll Rand.
Diversification Opportunities for Barnes and Ingersoll Rand
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnes and Ingersoll is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Ingersoll Rand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingersoll Rand and Barnes 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 Barnes Group are associated (or correlated) with Ingersoll Rand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingersoll Rand has no effect on the direction of Barnes i.e., Barnes and Ingersoll Rand go up and down completely randomly.
Pair Corralation between Barnes and Ingersoll Rand
Taking into account the 90-day investment horizon Barnes Group is expected to under-perform the Ingersoll Rand. In addition to that, Barnes is 2.07 times more volatile than Ingersoll Rand. It trades about -0.07 of its total potential returns per unit of risk. Ingersoll Rand is currently generating about -0.13 per unit of volatility. If you would invest 9,526 in Ingersoll Rand on January 27, 2024 and sell it today you would lose (323.00) from holding Ingersoll Rand or give up 3.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Ingersoll Rand
Performance |
| Timeline |
| Barnes Group |
| Ingersoll Rand |
Barnes and Ingersoll Rand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Ingersoll Rand
The main advantage of trading using opposite Barnes and Ingersoll Rand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Ingersoll Rand 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 Ingersoll Rand will offset losses from the drop in Ingersoll Rand's long position.The idea behind Barnes Group and Ingersoll Rand 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.| Ingersoll Rand vs. Emerson Electric | Ingersoll Rand vs. Smith AO | Ingersoll Rand vs. Eaton PLC | Ingersoll Rand vs. Cummins |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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