Correlation Between Barnes and WESCO International
Can any of the company-specific risk be diversified away by investing in both Barnes and WESCO International 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 WESCO International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and WESCO International, you can compare the effects of market volatilities on Barnes and WESCO International 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 WESCO International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and WESCO International.
Diversification Opportunities for Barnes and WESCO International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnes and WESCO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and WESCO International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO International 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 WESCO International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO International has no effect on the direction of Barnes i.e., Barnes and WESCO International go up and down completely randomly.
Pair Corralation between Barnes and WESCO International
Taking into account the 90-day investment horizon Barnes is expected to generate 8.05 times less return on investment than WESCO International. But when comparing it to its historical volatility, Barnes Group is 1.45 times less risky than WESCO International. It trades about 0.04 of its potential returns per unit of risk. WESCO International is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,596 in WESCO International on August 27, 2024 and sell it today you would earn a total of 18.00 from holding WESCO International or generate 0.69% 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. WESCO International
Performance |
| Timeline |
| Barnes Group |
| WESCO International |
Barnes and WESCO International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and WESCO International
The main advantage of trading using opposite Barnes and WESCO International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, WESCO International 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 WESCO International will offset losses from the drop in WESCO International's long position.| Barnes vs. Aquagold International | Barnes vs. Morningstar Unconstrained Allocation | Barnes vs. High Yield Municipal Fund | Barnes vs. Thrivent High Yield |
| WESCO International vs. SiriusPoint | WESCO International vs. Argo Group International | WESCO International vs. Global Ship Lease | WESCO International vs. Compass Diversified |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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