Correlation Between Actuant Corp and Barnes

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

Diversification Opportunities for Actuant Corp and Barnes

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Actuant and Barnes is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Actuant Corp and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Actuant 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 Actuant 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 Actuant Corp i.e., Actuant Corp and Barnes go up and down completely randomly.

Pair Corralation between Actuant Corp and Barnes

Given the investment horizon of 90 days Actuant Corp is expected to under-perform the Barnes. But the stock apears to be less risky and, when comparing its historical volatility, Actuant Corp is 1.42 times less risky than Barnes. The stock trades about -0.63 of its potential returns per unit of risk. The Barnes Group is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest  3,205  in Barnes Group on June 30, 2022 and sell it today you would lose (354.00)  from holding Barnes Group or give up 11.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Actuant Corp  vs.  Barnes Group

 Performance (%) 
       Timeline  
Actuant Corp 
Actuant Performance
0 of 100
Over the last 90 days Actuant Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Actuant 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 latest abnormal performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Barnes Price Channel

Actuant Corp and Barnes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Actuant Corp and Barnes

The main advantage of trading using opposite Actuant Corp and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Actuant 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.
Actuant Corp vs. Clearwater Paper Corp
The idea behind Actuant 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.
Barnes vs. Clearwater Paper Corp
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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