Correlation Between Barnes and Next Hydrogen
Can any of the company-specific risk be diversified away by investing in both Barnes and Next Hydrogen 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 Next Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Next Hydrogen Solutions, you can compare the effects of market volatilities on Barnes and Next Hydrogen 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 Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Next Hydrogen.
Diversification Opportunities for Barnes and Next Hydrogen
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barnes and Next is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions 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 Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Barnes i.e., Barnes and Next Hydrogen go up and down completely randomly.
Pair Corralation between Barnes and Next Hydrogen
Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.01 times more return on investment than Next Hydrogen. However, Barnes Group is 95.51 times less risky than Next Hydrogen. It trades about 0.09 of its potential returns per unit of risk. Next Hydrogen Solutions is currently generating about -0.11 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Next Hydrogen Solutions
Performance |
| Timeline |
| Barnes Group |
| Next Hydrogen Solutions |
Barnes and Next Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Next Hydrogen
The main advantage of trading using opposite Barnes and Next Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Next Hydrogen 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 Next Hydrogen will offset losses from the drop in Next Hydrogen's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Next Hydrogen vs. Weir Group PLC | Next Hydrogen vs. Greenshift Corp | Next Hydrogen vs. Quality Industrial Corp | Next Hydrogen vs. ITM Power 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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