Correlation Between Barnes and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Barnes and Franklin Electric 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 Franklin Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Franklin Electric Co, you can compare the effects of market volatilities on Barnes and Franklin Electric 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 Franklin Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Franklin Electric.
Diversification Opportunities for Barnes and Franklin Electric
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barnes and Franklin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric 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 Franklin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Electric has no effect on the direction of Barnes i.e., Barnes and Franklin Electric go up and down completely randomly.
Pair Corralation between Barnes and Franklin Electric
Taking into account the 90-day investment horizon Barnes is expected to generate 44.36 times less return on investment than Franklin Electric. But when comparing it to its historical volatility, Barnes Group is 19.54 times less risky than Franklin Electric. It trades about 0.05 of its potential returns per unit of risk. Franklin Electric Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,180 in Franklin Electric Co on August 24, 2024 and sell it today you would earn a total of 627.50 from holding Franklin Electric Co or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Franklin Electric Co
Performance |
| Timeline |
| Barnes Group |
| Franklin Electric |
Barnes and Franklin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Franklin Electric
The main advantage of trading using opposite Barnes and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Franklin Electric 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 Franklin Electric will offset losses from the drop in Franklin Electric's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Franklin Electric vs. Graco Inc | Franklin Electric vs. Ametek Inc | Franklin Electric vs. Flowserve | Franklin Electric vs. Donaldson |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |