Correlation Between Barnes and ITM Power
Can any of the company-specific risk be diversified away by investing in both Barnes and ITM Power 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 ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and ITM Power Plc, you can compare the effects of market volatilities on Barnes and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and ITM Power.
Diversification Opportunities for Barnes and ITM Power
Pay attention - limited upside
The 3 months correlation between Barnes and ITM is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Barnes i.e., Barnes and ITM Power go up and down completely randomly.
Pair Corralation between Barnes and ITM Power
Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.03 times more return on investment than ITM Power. However, Barnes Group is 39.82 times less risky than ITM Power. It trades about 0.09 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.24 per unit of risk. If you would invest 4,675 in Barnes Group on September 2, 2024 and sell it today you would earn a total of 9.00 from holding Barnes Group or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. ITM Power Plc
Performance |
| Timeline |
| Barnes Group |
| ITM Power Plc |
Barnes and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and ITM Power
The main advantage of trading using opposite Barnes and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| ITM Power vs. Next Hydrogen Solutions | ITM Power vs. Nel ASA | ITM Power vs. Titan Logix Corp | ITM Power vs. Weir Group PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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