Correlation Between Barnes and Tuesday Morning
Can any of the company-specific risk be diversified away by investing in both Barnes and Tuesday Morning 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 Tuesday Morning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Tuesday Morning Corp, you can compare the effects of market volatilities on Barnes and Tuesday Morning 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 Tuesday Morning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Tuesday Morning.
Diversification Opportunities for Barnes and Tuesday Morning
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barnes and Tuesday is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Tuesday Morning Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuesday Morning Corp 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 Tuesday Morning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuesday Morning Corp has no effect on the direction of Barnes i.e., Barnes and Tuesday Morning go up and down completely randomly.
Pair Corralation between Barnes and Tuesday Morning
Taking into account the 90-day investment horizon Barnes Group is expected to under-perform the Tuesday Morning. But the stock apears to be less risky and, when comparing its historical volatility, Barnes Group is 38.64 times less risky than Tuesday Morning. The stock trades about 0.0 of its potential returns per unit of risk. The Tuesday Morning Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.03 in Tuesday Morning Corp on January 25, 2024 and sell it today you would lose (0.02) from holding Tuesday Morning Corp or give up 66.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 36.84% |
Values | Daily Returns |
Barnes Group vs. Tuesday Morning Corp
Performance |
Timeline |
Barnes Group |
Tuesday Morning Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Barnes and Tuesday Morning Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barnes and Tuesday Morning
The main advantage of trading using opposite Barnes and Tuesday Morning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes position performs unexpectedly, Tuesday Morning 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 Tuesday Morning will offset losses from the drop in Tuesday Morning's long position.The idea behind Barnes Group and Tuesday Morning Corp 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.Tuesday Morning vs. MercadoLibre | Tuesday Morning vs. Pinduoduo | Tuesday Morning vs. JD Inc Adr | Tuesday Morning vs. Alibaba Group Holding |
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 Stocks Directory module to find actively traded stocks across global markets.
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