Correlation Between Barnes and Capstone Green

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

Diversification Opportunities for Barnes and Capstone Green

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Barnes and Capstone is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy 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 Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of Barnes i.e., Barnes and Capstone Green go up and down completely randomly.

Pair Corralation between Barnes and Capstone Green

If you would invest  3,919  in Barnes Group on April 14, 2024 and sell it today you would earn a total of  217.00  from holding Barnes Group or generate 5.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Barnes Group  vs.  Capstone Green Energy

 Performance 
       Timeline  
Barnes Group 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.
Capstone Green Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Capstone Green Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Capstone Green is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Barnes and Capstone Green Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barnes and Capstone Green

The main advantage of trading using opposite Barnes and Capstone Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Capstone Green 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 Capstone Green will offset losses from the drop in Capstone Green's long position.
The idea behind Barnes Group and Capstone Green Energy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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