Correlation Between Barnes and Matson
Can any of the company-specific risk be diversified away by investing in both Barnes and Matson 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 Matson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Matson Inc, you can compare the effects of market volatilities on Barnes and Matson 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 Matson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Matson.
Diversification Opportunities for Barnes and Matson
Good diversification
The 3 months correlation between Barnes and Matson is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Inc 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 Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of Barnes i.e., Barnes and Matson go up and down completely randomly.
Pair Corralation between Barnes and Matson
Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.04 times more return on investment than Matson. However, Barnes Group is 24.33 times less risky than Matson. It trades about 0.65 of its potential returns per unit of risk. Matson Inc is currently generating about -0.04 per unit of risk. If you would invest 4,725 in Barnes Group on November 8, 2024 and sell it today you would earn a total of 23.00 from holding Barnes Group or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.14% |
| Values | Daily Returns |
Barnes Group vs. Matson Inc
Performance |
| Timeline |
| Barnes Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
| Matson Inc |
Barnes and Matson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Matson
The main advantage of trading using opposite Barnes and Matson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Matson 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 Matson will offset losses from the drop in Matson's long position.The idea behind Barnes Group and Matson Inc 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.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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