Correlation Between Dover Corp and Barnes

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

Diversification Opportunities for Dover Corp and Barnes

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Dover and Barnes is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dover Corp and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Dover Corp 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 Dover Corp 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 Dover Corp i.e., Dover Corp and Barnes go up and down completely randomly.

Pair Corralation between Dover Corp and Barnes

Considering the 90-day investment horizon Dover Corp is expected to under-perform the Barnes. But the stock apears to be less risky and, when comparing its historical volatility, Dover Corp is 1.15 times less risky than Barnes. The stock trades about -0.19 of its potential returns per unit of risk. The Barnes Group is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  4,000  in Barnes Group on March 31, 2022 and sell it today you would lose (874.00)  from holding Barnes Group or give up 21.85% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.39%
ValuesDaily Returns

Dover Corp  vs.  Barnes Group

 Performance (%) 
      Timeline 
Dover Corp 
Dover Performance
0 of 100
Over the last 90 days Dover Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in July 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0168
Payout Ratio
0.26
Last Split Factor
1238:1000
Forward Annual Dividend Rate
2.0
Dividend Date
2022-06-15
Ex Dividend Date
2022-05-27
Last Split Date
2018-05-09

Dover Price Channel

Barnes Group 
Barnes Performance
0 of 100
Over the last 90 days Barnes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0199
Payout Ratio
0.33
Last Split Factor
2:1
Forward Annual Dividend Rate
0.64
Dividend Date
2022-06-10
Ex Dividend Date
2022-05-25
Last Split Date
2006-06-12

Barnes Price Channel

Dover Corp and Barnes Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Dover Corp and Barnes

The main advantage of trading using opposite Dover Corp and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dover Corp 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 Dover Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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