Correlation Between Barnes and Nongfu Spring
Can any of the company-specific risk be diversified away by investing in both Barnes and Nongfu Spring 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 Nongfu Spring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Nongfu Spring Co, you can compare the effects of market volatilities on Barnes and Nongfu Spring 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 Nongfu Spring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Nongfu Spring.
Diversification Opportunities for Barnes and Nongfu Spring
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barnes and Nongfu is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Nongfu Spring Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongfu Spring 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 Nongfu Spring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongfu Spring has no effect on the direction of Barnes i.e., Barnes and Nongfu Spring go up and down completely randomly.
Pair Corralation between Barnes and Nongfu Spring
Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.49 times more return on investment than Nongfu Spring. However, Barnes Group is 2.05 times less risky than Nongfu Spring. It trades about 0.16 of its potential returns per unit of risk. Nongfu Spring Co is currently generating about 0.06 per unit of risk. If you would invest 3,829 in Barnes Group on September 2, 2024 and sell it today you would earn a total of 855.00 from holding Barnes Group or generate 22.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
Barnes Group vs. Nongfu Spring Co
Performance |
| Timeline |
| Barnes Group |
| Nongfu Spring |
Barnes and Nongfu Spring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Nongfu Spring
The main advantage of trading using opposite Barnes and Nongfu Spring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Nongfu Spring 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 Nongfu Spring will offset losses from the drop in Nongfu Spring's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Nongfu Spring vs. PepsiCo | Nongfu Spring vs. Coca Cola Consolidated | Nongfu Spring vs. Monster Beverage Corp | Nongfu Spring vs. Celsius 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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