Correlation Between Barnes and Euro Tech
Can any of the company-specific risk be diversified away by investing in both Barnes and Euro Tech 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 Euro Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Euro Tech Holdings, you can compare the effects of market volatilities on Barnes and Euro Tech 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 Euro Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Euro Tech.
Diversification Opportunities for Barnes and Euro Tech
Very good diversification
The 3 months correlation between Barnes and Euro is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Euro Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Tech Holdings 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 Euro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Tech Holdings has no effect on the direction of Barnes i.e., Barnes and Euro Tech go up and down completely randomly.
Pair Corralation between Barnes and Euro Tech
Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.05 times more return on investment than Euro Tech. However, Barnes Group is 18.68 times less risky than Euro Tech. It trades about 0.07 of its potential returns per unit of risk. Euro Tech Holdings is currently generating about -0.16 per unit of risk. If you would invest 4,679 in Barnes Group on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Barnes Group or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Barnes Group vs. Euro Tech Holdings
Performance |
| Timeline |
| Barnes Group |
| Euro Tech Holdings |
Barnes and Euro Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Euro Tech
The main advantage of trading using opposite Barnes and Euro Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Euro Tech 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 Euro Tech will offset losses from the drop in Euro Tech's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Euro Tech vs. LiqTech International | Euro Tech vs. TOMI Environmental Solutions | Euro Tech vs. ClearSign Combustion | Euro Tech vs. Vow ASA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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