Correlation Between Barnes and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Barnes and Rockwell Automation 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 Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Rockwell Automation, you can compare the effects of market volatilities on Barnes and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Rockwell Automation.
Diversification Opportunities for Barnes and Rockwell Automation
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnes and Rockwell is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Barnes i.e., Barnes and Rockwell Automation go up and down completely randomly.
Pair Corralation between Barnes and Rockwell Automation
Taking into account the 90-day investment horizon Barnes Group is expected to generate 1.27 times more return on investment than Rockwell Automation. However, Barnes is 1.27 times more volatile than Rockwell Automation. It trades about 0.03 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.02 per unit of risk. If you would invest 4,019 in Barnes Group on August 24, 2024 and sell it today you would earn a total of 655.00 from holding Barnes Group or generate 16.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Rockwell Automation
Performance |
| Timeline |
| Barnes Group |
| Rockwell Automation |
Barnes and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Rockwell Automation
The main advantage of trading using opposite Barnes and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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