Correlation Between Barnes and Brinks
Can any of the company-specific risk be diversified away by investing in both Barnes and Brinks 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 Brinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Brinks Company, you can compare the effects of market volatilities on Barnes and Brinks 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 Brinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Brinks.
Diversification Opportunities for Barnes and Brinks
Pay attention - limited upside
The 3 months correlation between Barnes and Brinks is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company 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 Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of Barnes i.e., Barnes and Brinks go up and down completely randomly.
Pair Corralation between Barnes and Brinks
Taking into account the 90-day investment horizon Barnes is expected to generate 3.03 times less return on investment than Brinks. But when comparing it to its historical volatility, Barnes Group is 16.37 times less risky than Brinks. It trades about 0.42 of its potential returns per unit of risk. Brinks Company is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,101 in Brinks Company on October 25, 2024 and sell it today you would earn a total of 160.00 from holding Brinks Company or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Barnes Group vs. Brinks Company
Performance |
| Timeline |
| Barnes Group |
| Brinks Company |
Barnes and Brinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Brinks
The main advantage of trading using opposite Barnes and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Brinks vs. MSA Safety | Brinks vs. Resideo Technologies | Brinks vs. Mistras Group | Brinks vs. NL Industries |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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