Correlation Between Barnes and Fortune Brands
Can any of the company-specific risk be diversified away by investing in both Barnes and Fortune Brands 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 Fortune Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Fortune Brands Innovations, you can compare the effects of market volatilities on Barnes and Fortune Brands 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 Fortune Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Fortune Brands.
Diversification Opportunities for Barnes and Fortune Brands
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barnes and Fortune is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Fortune Brands Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Innov 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Innov has no effect on the direction of Barnes i.e., Barnes and Fortune Brands go up and down completely randomly.
Pair Corralation between Barnes and Fortune Brands
Taking into account the 90-day investment horizon Barnes Group is expected to generate 1.32 times more return on investment than Fortune Brands. However, Barnes is 1.32 times more volatile than Fortune Brands Innovations. It trades about 0.03 of its potential returns per unit of risk. Fortune Brands Innovations is currently generating about 0.01 per unit of risk. If you would invest 4,047 in Barnes Group on November 1, 2024 and sell it today you would earn a total of 701.00 from holding Barnes Group or generate 17.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.49% |
| Values | Daily Returns |
Barnes Group vs. Fortune Brands Innovations
Performance |
| Timeline |
| Barnes Group |
| Fortune Brands Innov |
Barnes and Fortune Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Fortune Brands
The main advantage of trading using opposite Barnes and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Fortune Brands vs. Trane Technologies plc | Fortune Brands vs. Johnson Controls International | Fortune Brands vs. Lennox International | Fortune Brands vs. Builders FirstSource |
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 CEOs Directory module to screen CEOs from public companies around the world.
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