Correlation Between Barnes and Transcat
Can any of the company-specific risk be diversified away by investing in both Barnes and Transcat 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 Transcat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Transcat, you can compare the effects of market volatilities on Barnes and Transcat 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 Transcat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Transcat.
Diversification Opportunities for Barnes and Transcat
Very good diversification
The 3 months correlation between Barnes and Transcat is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Transcat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcat 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 Transcat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcat has no effect on the direction of Barnes i.e., Barnes and Transcat go up and down completely randomly.
Pair Corralation between Barnes and Transcat
Taking into account the 90-day investment horizon Barnes is expected to generate 53.38 times less return on investment than Transcat. But when comparing it to its historical volatility, Barnes Group is 27.79 times less risky than Transcat. It trades about 0.09 of its potential returns per unit of risk. Transcat is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 9,541 in Transcat on September 2, 2024 and sell it today you would earn a total of 948.00 from holding Transcat or generate 9.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Transcat
Performance |
| Timeline |
| Barnes Group |
| Transcat |
Barnes and Transcat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Transcat
The main advantage of trading using opposite Barnes and Transcat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Transcat 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 Transcat will offset losses from the drop in Transcat's long position.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Transcat vs. BlueLinx Holdings | Transcat vs. SiteOne Landscape Supply | Transcat vs. DXP Enterprises | Transcat vs. Core Main |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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