Correlation Between Barnes and Legato Merger
Can any of the company-specific risk be diversified away by investing in both Barnes and Legato Merger 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 Legato Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Legato Merger II, you can compare the effects of market volatilities on Barnes and Legato Merger 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 Legato Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Legato Merger.
Diversification Opportunities for Barnes and Legato Merger
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barnes and Legato is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Legato Merger II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legato Merger II 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 Legato Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legato Merger II has no effect on the direction of Barnes i.e., Barnes and Legato Merger go up and down completely randomly.
Pair Corralation between Barnes and Legato Merger
Taking into account the 90-day investment horizon Barnes is expected to generate 69.77 times less return on investment than Legato Merger. But when comparing it to its historical volatility, Barnes Group is 89.95 times less risky than Legato Merger. It trades about 0.07 of its potential returns per unit of risk. Legato Merger II is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 316.00 in Legato Merger II on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Legato Merger II or generate 1.58% 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. Legato Merger II
Performance |
| Timeline |
| Barnes Group |
| Legato Merger II |
Barnes and Legato Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Legato Merger
The main advantage of trading using opposite Barnes and Legato Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Legato Merger 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 Legato Merger will offset losses from the drop in Legato Merger's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Legato Merger vs. LB Foster | Legato Merger vs. Pearson PLC ADR | Legato Merger vs. Udemy Inc | Legato Merger vs. Scholastic |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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