Correlation Between Barnes and CVD Equipment
Can any of the company-specific risk be diversified away by investing in both Barnes and CVD Equipment 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 CVD Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and CVD Equipment, you can compare the effects of market volatilities on Barnes and CVD Equipment 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 CVD Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and CVD Equipment.
Diversification Opportunities for Barnes and CVD Equipment
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barnes and CVD is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and CVD Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVD Equipment 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 CVD Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVD Equipment has no effect on the direction of Barnes i.e., Barnes and CVD Equipment go up and down completely randomly.
Pair Corralation between Barnes and CVD Equipment
Taking into account the 90-day investment horizon Barnes is expected to generate 25.5 times less return on investment than CVD Equipment. But when comparing it to its historical volatility, Barnes Group is 44.58 times less risky than CVD Equipment. It trades about 0.08 of its potential returns per unit of risk. CVD Equipment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 296.00 in CVD Equipment on August 31, 2024 and sell it today you would earn a total of 7.00 from holding CVD Equipment or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. CVD Equipment
Performance |
| Timeline |
| Barnes Group |
| CVD Equipment |
Barnes and CVD Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and CVD Equipment
The main advantage of trading using opposite Barnes and CVD Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, CVD Equipment 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 CVD Equipment will offset losses from the drop in CVD Equipment's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| CVD Equipment vs. Standex International | CVD Equipment vs. Intevac | CVD Equipment vs. Thermon Group Holdings | CVD Equipment vs. Enpro 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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