Correlation Between Barnes and Purecycle Technologies
Can any of the company-specific risk be diversified away by investing in both Barnes and Purecycle Technologies 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 Purecycle Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Purecycle Technologies Holdings, you can compare the effects of market volatilities on Barnes and Purecycle Technologies 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 Purecycle Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Purecycle Technologies.
Diversification Opportunities for Barnes and Purecycle Technologies
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Barnes and Purecycle is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Purecycle Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purecycle Technologies 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 Purecycle Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purecycle Technologies has no effect on the direction of Barnes i.e., Barnes and Purecycle Technologies go up and down completely randomly.
Pair Corralation between Barnes and Purecycle Technologies
Taking into account the 90-day investment horizon Barnes is expected to generate 11.02 times less return on investment than Purecycle Technologies. But when comparing it to its historical volatility, Barnes Group is 63.22 times less risky than Purecycle Technologies. It trades about 0.36 of its potential returns per unit of risk. Purecycle Technologies Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,205 in Purecycle Technologies Holdings on November 3, 2024 and sell it today you would earn a total of 47.00 from holding Purecycle Technologies Holdings or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Barnes Group vs. Purecycle Technologies Holding
Performance |
| Timeline |
| Barnes Group |
| Purecycle Technologies |
Barnes and Purecycle Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Purecycle Technologies
The main advantage of trading using opposite Barnes and Purecycle Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Purecycle Technologies 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 Purecycle Technologies will offset losses from the drop in Purecycle Technologies' long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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