Correlation Between Enerpac Tool and Barnes
Can any of the company-specific risk be diversified away by investing in both Enerpac Tool and Barnes 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 Enerpac Tool and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enerpac Tool Group and Barnes Group, you can compare the effects of market volatilities on Enerpac Tool and Barnes 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 Enerpac Tool with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerpac Tool and Barnes.
Diversification Opportunities for Enerpac Tool and Barnes
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enerpac and Barnes is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Barnes go up and down completely randomly.
Pair Corralation between Enerpac Tool and Barnes
Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.32 times more return on investment than Barnes. However, Enerpac Tool Group is 3.11 times less risky than Barnes. It trades about 0.13 of its potential returns per unit of risk. Barnes Group is currently generating about -0.01 per unit of risk. If you would invest 3,525 in Enerpac Tool Group on January 25, 2024 and sell it today you would earn a total of 78.50 from holding Enerpac Tool Group or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enerpac Tool Group vs. Barnes Group
Performance |
| Timeline |
| Enerpac Tool Group |
| Barnes Group |
Enerpac Tool and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enerpac Tool and Barnes
The main advantage of trading using opposite Enerpac Tool and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.| Enerpac Tool vs. Parker Hannifin | Enerpac Tool vs. Emerson Electric | Enerpac Tool vs. Smith AO | Enerpac Tool vs. Watts Water Technologies |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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