Correlation Between Barnes and General Electric

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Can any of the company-specific risk be diversified away by investing in both Barnes and General Electric 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 Barnes and General Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and General Electric, you can compare the effects of market volatilities on Barnes and General Electric 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 Barnes with a short position of General Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and General Electric.

Diversification Opportunities for Barnes and General Electric

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Barnes and General is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Electric and Barnes 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 Barnes Group are associated (or correlated) with General Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Electric has no effect on the direction of Barnes i.e., Barnes and General Electric go up and down completely randomly.

Pair Corralation between Barnes and General Electric

Taking into account the 90-day investment horizon Barnes Group is expected to under-perform the General Electric. But the stock apears to be less risky and, when comparing its historical volatility, Barnes Group is 1.01 times less risky than General Electric. The stock trades about -0.01 of its potential returns per unit of risk. The General Electric is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,789  in General Electric on July 9, 2022 and sell it today you would earn a total of  833.00  from holding General Electric or generate 14.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

Barnes Group  vs.  General Electric

 Performance (%) 
       Timeline  
Barnes Group 
Barnes Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Barnes may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Barnes Price Channel

General Electric 
General Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, General Electric may actually be approaching a critical reversion point that can send shares even higher in November 2022.

General Price Channel

Barnes and General Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barnes and General Electric

The main advantage of trading using opposite Barnes and General Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, General Electric 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 General Electric will offset losses from the drop in General Electric's long position.
Barnes vs. Amazon Inc
The idea behind Barnes Group and General Electric 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.
General Electric vs. Amazon Inc
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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