Correlation Between Barnes and Chart Industries
Can any of the company-specific risk be diversified away by investing in both Barnes and Chart Industries 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 Chart Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Chart Industries, you can compare the effects of market volatilities on Barnes and Chart Industries 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 Chart Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Chart Industries.
Diversification Opportunities for Barnes and Chart Industries
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Barnes and Chart is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Barnes i.e., Barnes and Chart Industries go up and down completely randomly.
Pair Corralation between Barnes and Chart Industries
Taking into account the 90-day investment horizon Barnes is expected to generate 8.82 times less return on investment than Chart Industries. But when comparing it to its historical volatility, Barnes Group is 39.31 times less risky than Chart Industries. It trades about 0.65 of its potential returns per unit of risk. Chart Industries is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 19,997 in Chart Industries on November 8, 2024 and sell it today you would earn a total of 1,355 from holding Chart Industries or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.0% |
| Values | Daily Returns |
Barnes Group vs. Chart Industries
Performance |
| Timeline |
| Barnes Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
| Chart Industries |
Barnes and Chart Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Chart Industries
The main advantage of trading using opposite Barnes and Chart Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Chart Industries 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 Chart Industries will offset losses from the drop in Chart Industries' long position.The idea behind Barnes Group and Chart Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Chart Industries vs. Crane NXT Co | Chart Industries vs. Donaldson | Chart Industries vs. ITT Inc | Chart Industries vs. Franklin Electric Co |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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