Correlation Between John Bean and Barnes
Can any of the company-specific risk be diversified away by investing in both John Bean 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 John Bean and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and Barnes Group, you can compare the effects of market volatilities on John Bean 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 John Bean with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and Barnes.
Diversification Opportunities for John Bean and Barnes
Very poor diversification
The 3 months correlation between John and Barnes is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and John Bean 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 John Bean Technologies 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 John Bean i.e., John Bean and Barnes go up and down completely randomly.
Pair Corralation between John Bean and Barnes
Considering the 90-day investment horizon John Bean Technologies is expected to generate 1.58 times more return on investment than Barnes. However, John Bean is 1.58 times more volatile than Barnes Group. It trades about 0.18 of its potential returns per unit of risk. Barnes Group is currently generating about 0.17 per unit of risk. If you would invest 9,851 in John Bean Technologies on August 30, 2024 and sell it today you would earn a total of 2,675 from holding John Bean Technologies or generate 27.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Bean Technologies vs. Barnes Group
Performance |
| Timeline |
| John Bean Technologies |
| Barnes Group |
John Bean and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and Barnes
The main advantage of trading using opposite John Bean and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean 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.| John Bean vs. Flowserve | John Bean vs. Franklin Electric Co | John Bean vs. ITT Inc | John Bean vs. IDEX Corporation |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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