Correlation Between Crane and Barnes
Can any of the company-specific risk be diversified away by investing in both Crane 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 Crane and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crane Company and Barnes Group, you can compare the effects of market volatilities on Crane 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 Crane with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Barnes.
Diversification Opportunities for Crane and Barnes
Very good diversification
The 3 months correlation between Crane and Barnes is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Crane 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 Crane Company 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 Crane i.e., Crane and Barnes go up and down completely randomly.
Pair Corralation between Crane and Barnes
Allowing for the 90-day total investment horizon Crane Company is expected to generate 39.86 times more return on investment than Barnes. However, Crane is 39.86 times more volatile than Barnes Group. It trades about 0.16 of its potential returns per unit of risk. Barnes Group is currently generating about 0.76 per unit of risk. If you would invest 15,600 in Crane Company on November 18, 2024 and sell it today you would earn a total of 1,549 from holding Crane Company or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.57% |
| Values | Daily Returns |
Crane Company vs. Barnes Group
Performance |
| Timeline |
| Crane Company |
| Barnes Group |
Risk-Adjusted Performance
Very Strong
Weak | Strong |
Crane and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crane and Barnes
The main advantage of trading using opposite Crane and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane 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.| Crane vs. Standex International | Crane vs. Donaldson | Crane vs. CSW Industrials | Crane 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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