Correlation Between Regal Beloit and Barnes
Can any of the company-specific risk be diversified away by investing in both Regal Beloit 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 Regal Beloit and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Beloit and Barnes Group, you can compare the effects of market volatilities on Regal Beloit 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 Regal Beloit with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Beloit and Barnes.
Diversification Opportunities for Regal Beloit and Barnes
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regal and Barnes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Regal Beloit and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Regal Beloit 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 Regal Beloit 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 Regal Beloit i.e., Regal Beloit and Barnes go up and down completely randomly.
Pair Corralation between Regal Beloit and Barnes
Considering the 90-day investment horizon Regal Beloit is expected to generate 25.95 times more return on investment than Barnes. However, Regal Beloit is 25.95 times more volatile than Barnes Group. It trades about 0.01 of its potential returns per unit of risk. Barnes Group is currently generating about 0.07 per unit of risk. If you would invest 16,942 in Regal Beloit on August 30, 2024 and sell it today you would earn a total of 24.00 from holding Regal Beloit or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Beloit vs. Barnes Group
Performance |
| Timeline |
| Regal Beloit |
| Barnes Group |
Regal Beloit and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Beloit and Barnes
The main advantage of trading using opposite Regal Beloit and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Beloit 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.| Regal Beloit vs. IDEX Corporation | Regal Beloit vs. Watts Water Technologies | Regal Beloit vs. Donaldson | Regal Beloit vs. Gorman Rupp |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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