Correlation Between Franklin Electric and Barnes
Can any of the company-specific risk be diversified away by investing in both Franklin Electric 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 Franklin Electric and Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Electric Co and Barnes Group, you can compare the effects of market volatilities on Franklin Electric 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 Franklin Electric with a short position of Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Electric and Barnes.
Diversification Opportunities for Franklin Electric and Barnes
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Franklin and Barnes is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Electric Co and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Franklin Electric 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 Franklin Electric Co 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 Franklin Electric i.e., Franklin Electric and Barnes go up and down completely randomly.
Pair Corralation between Franklin Electric and Barnes
Given the investment horizon of 90 days Franklin Electric Co is expected to under-perform the Barnes. But the stock apears to be less risky and, when comparing its historical volatility, Franklin Electric Co is 1.63 times less risky than Barnes. The stock trades about -0.01 of its potential returns per unit of risk. The Barnes Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,629 in Barnes Group on February 23, 2024 and sell it today you would earn a total of 433.00 from holding Barnes Group or generate 11.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Franklin Electric Co vs. Barnes Group
Performance |
Timeline |
Franklin Electric |
Barnes Group |
Franklin Electric and Barnes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franklin Electric and Barnes
The main advantage of trading using opposite Franklin Electric and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Electric 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.Franklin Electric vs. Graco Inc | Franklin Electric vs. Ametek Inc | Franklin Electric vs. Flowserve | Franklin Electric vs. Donaldson |
Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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