Correlation Between Nordson and Barnes
Can any of the company-specific risk be diversified away by investing in both Nordson 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 Nordson and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordson and Barnes Group, you can compare the effects of market volatilities on Nordson 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 Nordson with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordson and Barnes.
Diversification Opportunities for Nordson and Barnes
Significant diversification
The 3 months correlation between Nordson and Barnes is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nordson and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Nordson 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 Nordson 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 Nordson i.e., Nordson and Barnes go up and down completely randomly.
Pair Corralation between Nordson and Barnes
Given the investment horizon of 90 days Nordson is expected to generate 14.37 times more return on investment than Barnes. However, Nordson is 14.37 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 0.12 per unit of risk. If you would invest 25,037 in Nordson on August 28, 2024 and sell it today you would earn a total of 1,325 from holding Nordson or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordson vs. Barnes Group
Performance |
| Timeline |
| Nordson |
| Barnes Group |
Nordson and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordson and Barnes
The main advantage of trading using opposite Nordson and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordson 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.| Nordson vs. Aquagold International | Nordson vs. Morningstar Unconstrained Allocation | Nordson vs. High Yield Municipal Fund | Nordson vs. Thrivent High Yield |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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