Correlation Between Barnes and Crane
Can any of the company-specific risk be diversified away by investing in both Barnes and Crane 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 Crane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Crane Company, you can compare the effects of market volatilities on Barnes and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Crane.
Diversification Opportunities for Barnes and Crane
Poor diversification
The 3 months correlation between Barnes and Crane is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane 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 Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Barnes i.e., Barnes and Crane go up and down completely randomly.
Pair Corralation between Barnes and Crane
Taking into account the 90-day investment horizon Barnes is expected to generate 89.52 times less return on investment than Crane. But when comparing it to its historical volatility, Barnes Group is 15.23 times less risky than Crane. It trades about 0.08 of its potential returns per unit of risk. Crane Company is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 14,898 in Crane Company on August 23, 2024 and sell it today you would earn a total of 3,418 from holding Crane Company or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Crane Company
Performance |
| Timeline |
| Barnes Group |
| Crane Company |
Barnes and Crane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Crane
The main advantage of trading using opposite Barnes and Crane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Crane 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 Crane will offset losses from the drop in Crane's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane vs. Franklin Electric Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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