Correlation Between Babcock Wilcox and Barnes
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Barnes 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 Babcock Wilcox and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock Wilcox Enterprises and Barnes Group, you can compare the effects of market volatilities on Babcock Wilcox and Barnes 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 Babcock Wilcox with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Barnes.
Diversification Opportunities for Babcock Wilcox and Barnes
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Babcock and Barnes is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Babcock Wilcox 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 Babcock Wilcox Enterprises are associated (or correlated) with Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Barnes go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Barnes
Allowing for the 90-day total investment horizon Babcock Wilcox Enterprises is expected to generate 3.32 times more return on investment than Barnes. However, Babcock Wilcox is 3.32 times more volatile than Barnes Group. It trades about 0.05 of its potential returns per unit of risk. Barnes Group is currently generating about 0.13 per unit of risk. If you would invest 157.00 in Babcock Wilcox Enterprises on August 24, 2024 and sell it today you would earn a total of 33.00 from holding Babcock Wilcox Enterprises or generate 21.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Babcock Wilcox Enterprises vs. Barnes Group
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Barnes Group |
Babcock Wilcox and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Barnes
The main advantage of trading using opposite Babcock Wilcox and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.| Babcock Wilcox vs. Enerpac Tool Group | Babcock Wilcox vs. Gorman Rupp | Babcock Wilcox vs. Crane Company | Babcock Wilcox vs. Franklin Electric Co |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |