Correlation Between Barnes and Global Industrial
Can any of the company-specific risk be diversified away by investing in both Barnes and Global Industrial 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 Global Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Global Industrial Co, you can compare the effects of market volatilities on Barnes and Global Industrial 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 Global Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Global Industrial.
Diversification Opportunities for Barnes and Global Industrial
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Barnes and Global is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial 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 Global Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Industrial has no effect on the direction of Barnes i.e., Barnes and Global Industrial go up and down completely randomly.
Pair Corralation between Barnes and Global Industrial
Taking into account the 90-day investment horizon Barnes is expected to generate 4.9 times less return on investment than Global Industrial. But when comparing it to its historical volatility, Barnes Group is 29.21 times less risky than Global Industrial. It trades about 0.59 of its potential returns per unit of risk. Global Industrial Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,399 in Global Industrial Co on November 5, 2024 and sell it today you would earn a total of 72.00 from holding Global Industrial Co or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 73.68% |
| Values | Daily Returns |
Barnes Group vs. Global Industrial Co
Performance |
| Timeline |
| Barnes Group |
| Global Industrial |
Barnes and Global Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Global Industrial
The main advantage of trading using opposite Barnes and Global Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Global Industrial 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 Global Industrial will offset losses from the drop in Global Industrial's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Global Industrial vs. Distribution Solutions Group | Global Industrial vs. Core Main | Global Industrial vs. Applied Industrial Technologies | Global Industrial vs. BlueLinx Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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