Correlation Between Xylem and Barnes
Can any of the company-specific risk be diversified away by investing in both Xylem 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 Xylem and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xylem Inc and Barnes Group, you can compare the effects of market volatilities on Xylem 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 Xylem with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xylem and Barnes.
Diversification Opportunities for Xylem and Barnes
Very good diversification
The 3 months correlation between Xylem and Barnes is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Xylem Inc and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Xylem 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 Xylem Inc 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 Xylem i.e., Xylem and Barnes go up and down completely randomly.
Pair Corralation between Xylem and Barnes
Considering the 90-day investment horizon Xylem Inc is expected to under-perform the Barnes. In addition to that, Xylem is 15.89 times more volatile than Barnes Group. It trades about -0.07 of its total potential returns per unit of risk. Barnes Group is currently generating about -0.07 per unit of volatility. If you would invest 4,690 in Barnes Group on August 26, 2024 and sell it today you would lose (8.00) from holding Barnes Group or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xylem Inc vs. Barnes Group
Performance |
| Timeline |
| Xylem Inc |
| Barnes Group |
Xylem and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xylem and Barnes
The main advantage of trading using opposite Xylem and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xylem 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.| Xylem vs. Aquagold International | Xylem vs. Morningstar Unconstrained Allocation | Xylem vs. High Yield Municipal Fund | Xylem 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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