Correlation Between Transportation Portfolio and Barnes

Can any of the company-specific risk be diversified away by investing in both Transportation Portfolio 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 Transportation Portfolio and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transportation Portfolio Transportation and Barnes Group, you can compare the effects of market volatilities on Transportation Portfolio 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 Transportation Portfolio with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportation Portfolio and Barnes.

Diversification Opportunities for Transportation Portfolio and Barnes

0.75

Correlation Coefficient

Transportation Portfolio  Barnes

Poor diversification

The 3 months correlation between Transportation and Barnes is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Transportation Portfolio Trans and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Transportation Portfolio 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 Transportation Portfolio Transportation 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 Transportation Portfolio i.e., Transportation Portfolio and Barnes go up and down completely randomly.

Pair Corralation between Transportation Portfolio and Barnes

Assuming the 90 days horizon Transportation Portfolio is expected to generate 2.08 times less return on investment than Barnes. But when comparing it to its historical volatility, Transportation Portfolio Transportation is 1.85 times less risky than Barnes. It trades about 0.16 of its potential returns per unit of risk. Barnes Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,767  in Barnes Group on September 5, 2024 and sell it today you would earn a total of  939.00  from holding Barnes Group or generate 24.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Transportation Portfolio Trans  vs.  Barnes Group

Transportation Portfolio

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation Portfolio Transportation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Transportation Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Barnes Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportation Portfolio and Barnes

The main advantage of trading using opposite Transportation Portfolio and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportation Portfolio 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.

The idea behind Transportation Portfolio Transportation and Barnes Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.