Correlation Between Barnwell Industries and San Juan

Can any of the company-specific risk be diversified away by investing in both Barnwell Industries and San Juan 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 Barnwell Industries and San Juan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barnwell Industries and San Juan Basin, you can compare the effects of market volatilities on Barnwell Industries and San Juan 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 Barnwell Industries with a short position of San Juan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnwell Industries and San Juan.

Diversification Opportunities for Barnwell Industries and San Juan

-0.37

Correlation Coefficient

Barnwell Industries  San Juan

Very good diversification

The 3 months correlation between Barnwell and San is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Barnwell Industries and San Juan Basin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Juan Basin and Barnwell Industries 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 Barnwell Industries are associated (or correlated) with San Juan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Juan Basin has no effect on the direction of Barnwell Industries i.e., Barnwell Industries and San Juan go up and down completely randomly.

Pair Corralation between Barnwell Industries and San Juan

Considering the 90-day investment horizon Barnwell Industries is expected to under-perform the San Juan. In addition to that, Barnwell Industries is 1.05 times more volatile than San Juan Basin. It trades about -0.13 of its total potential returns per unit of risk. San Juan Basin is currently generating about 0.0 per unit of volatility. If you would invest  407.00  in San Juan Basin on September 25, 2024 and sell it today you would lose (16.00) from holding San Juan Basin or give up 3.93% of portfolio value over 90 days.

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

Barnwell Industries  vs.  San Juan Basin

Barnwell Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barnwell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

San Juan Basin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days San Juan Basin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, San Juan is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Barnwell Industries and San Juan

The main advantage of trading using opposite Barnwell Industries and San Juan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries position performs unexpectedly, San Juan 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 San Juan will offset losses from the drop in San Juan's long position.

The idea behind Barnwell Industries and San Juan Basin 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.