Correlation Between Barnes and Defense
Can any of the company-specific risk be diversified away by investing in both Barnes and Defense 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 Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Defense And Aerospace, you can compare the effects of market volatilities on Barnes and Defense 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 Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Defense.
Diversification Opportunities for Barnes and Defense
Very good diversification
The 3 months correlation between Barnes and Defense is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Defense And Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defense And Aerospace 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 Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defense And Aerospace has no effect on the direction of Barnes i.e., Barnes and Defense go up and down completely randomly.
Pair Corralation between Barnes and Defense
Taking into account the 90-day investment horizon Barnes Group is expected to generate 2.49 times more return on investment than Defense. However, Barnes is 2.49 times more volatile than Defense And Aerospace. It trades about 0.09 of its potential returns per unit of risk. Defense And Aerospace is currently generating about 0.12 per unit of risk. If you would invest 3,574 in Barnes Group on July 6, 2024 and sell it today you would earn a total of 952.00 from holding Barnes Group or generate 26.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Barnes Group vs. Defense And Aerospace
Performance |
Timeline |
Barnes Group |
Defense And Aerospace |
Barnes and Defense Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barnes and Defense
The main advantage of trading using opposite Barnes and Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Defense 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 Defense will offset losses from the drop in Defense's long position.Barnes vs. Babcock Wilcox Enterprises | Barnes vs. Siemens AG Class | Barnes vs. Nuburu Inc | Barnes vs. Twin Disc Incorporated |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |