Correlation Between American Superconductor and Barnes

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

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

Diversification Opportunities for American Superconductor and Barnes

0.27

Correlation Coefficient

American Superconductor  Barnes

Modest diversification

The 3 months correlation between American and Barnes is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Superconductor and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and American Superconductor 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 American Superconductor 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 American Superconductor i.e., American Superconductor and Barnes go up and down completely randomly.

Pair Corralation between American Superconductor and Barnes

Given the investment horizon of 90 days American Superconductor is expected to under-perform the Barnes. In addition to that, American Superconductor is 90.61 times more volatile than Barnes Group. It trades about -0.03 of its total potential returns per unit of risk. Barnes Group is currently generating about 0.41 per unit of volatility. If you would invest  4,716  in Barnes Group on December 20, 2024 and sell it today you would earn a total of  32.00  from holding Barnes Group or generate 0.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	38.33%
Values	Daily Returns

American Superconductor  vs.  Barnes Group

American Superconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Superconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Barnes Group

Risk-Adjusted Performance

Very Strong

Over the last 90 days Barnes Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Barnes is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Superconductor and Barnes

The main advantage of trading using opposite American Superconductor and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Superconductor 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.

The idea behind American Superconductor 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.