Correlation Between Barnes and Defense And
Can any of the company-specific risk be diversified away by investing in both Barnes and Defense And 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 Defense And into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Defense And Aerospace, you can compare the effects of market volatilities on Barnes and Defense And 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 Defense And. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Defense And.
Diversification Opportunities for Barnes and Defense And
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnes and Defense is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Defense And Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defense And Aerospace 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 Defense And. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defense And Aerospace has no effect on the direction of Barnes i.e., Barnes and Defense And go up and down completely randomly.
Pair Corralation between Barnes and Defense And
Taking into account the 90-day investment horizon Barnes is expected to generate 21.01 times less return on investment than Defense And. But when comparing it to its historical volatility, Barnes Group is 13.98 times less risky than Defense And. It trades about 0.07 of its potential returns per unit of risk. Defense And Aerospace is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,949 in Defense And Aerospace on August 28, 2024 and sell it today you would earn a total of 58.00 from holding Defense And Aerospace or generate 2.98% 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. Defense And Aerospace
Performance |
| Timeline |
| Barnes Group |
| Defense And Aerospace |
Barnes and Defense And Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Defense And
The main advantage of trading using opposite Barnes and Defense And positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Defense And 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 Defense And will offset losses from the drop in Defense And's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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