Correlation Between Ingersoll Rand and Barnes
Can any of the company-specific risk be diversified away by investing in both Ingersoll Rand 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 Ingersoll Rand and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingersoll Rand and Barnes Group, you can compare the effects of market volatilities on Ingersoll Rand 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 Ingersoll Rand with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingersoll Rand and Barnes.
Diversification Opportunities for Ingersoll Rand and Barnes
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingersoll and Barnes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ingersoll Rand and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Ingersoll Rand 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 Ingersoll Rand 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 Ingersoll Rand i.e., Ingersoll Rand and Barnes go up and down completely randomly.
Pair Corralation between Ingersoll Rand and Barnes
Allowing for the 90-day total investment horizon Ingersoll Rand is expected to generate 16.57 times more return on investment than Barnes. However, Ingersoll Rand is 16.57 times more volatile than Barnes Group. It trades about 0.24 of its potential returns per unit of risk. Barnes Group is currently generating about 0.12 per unit of risk. If you would invest 9,709 in Ingersoll Rand on August 28, 2024 and sell it today you would earn a total of 826.00 from holding Ingersoll Rand or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingersoll Rand vs. Barnes Group
Performance |
| Timeline |
| Ingersoll Rand |
| Barnes Group |
Ingersoll Rand and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingersoll Rand and Barnes
The main advantage of trading using opposite Ingersoll Rand and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingersoll Rand 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.| Ingersoll Rand vs. IDEX Corporation | Ingersoll Rand vs. Flowserve | Ingersoll Rand vs. Donaldson | Ingersoll Rand vs. Franklin Electric Co |
| Barnes vs. Aquagold International | Barnes vs. Morningstar Unconstrained Allocation | Barnes vs. High Yield Municipal Fund | Barnes vs. Thrivent High Yield |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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