Correlation Between Barnes and Ametek

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

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

Diversification Opportunities for Barnes and Ametek

0.86

Correlation Coefficient

Barnes  Ametek

Very poor diversification

The 3 months correlation between Barnes and Ametek is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc 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 Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Barnes i.e., Barnes and Ametek go up and down completely randomly.

Pair Corralation between Barnes and Ametek

Taking into account the 90-day investment horizon Barnes is expected to generate 1.07 times less return on investment than Ametek. In addition to that, Barnes is 2.03 times more volatile than Ametek Inc. It trades about 0.08 of its total potential returns per unit of risk. Ametek Inc is currently generating about 0.17 per unit of volatility. If you would invest  16,206  in Ametek Inc on January 18, 2024 and sell it today you would earn a total of  1,599  from holding Ametek Inc or generate 9.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Barnes Group  vs.  Ametek Inc

Barnes Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Barnes may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Ametek Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Barnes and Ametek

The main advantage of trading using opposite Barnes and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Ametek 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 Ametek will offset losses from the drop in Ametek's long position.

The idea behind Barnes Group and Ametek Inc 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.