Correlation Between Barnes and Grupo Aeroportuario

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

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

Diversification Opportunities for Barnes and Grupo Aeroportuario

-0.71

Correlation Coefficient

Barnes  Grupo Aeroportuario

Pay attention - limited upside

The 3 months correlation between Barnes and Grupo is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Barnes i.e., Barnes and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Barnes and Grupo Aeroportuario

Taking into account the 90-day investment horizon Barnes is expected to generate 3.71 times less return on investment than Grupo Aeroportuario. But when comparing it to its historical volatility, Barnes Group is 17.59 times less risky than Grupo Aeroportuario. It trades about 0.43 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  26,500  in Grupo Aeroportuario del on September 19, 2024 and sell it today you would earn a total of  863.00  from holding Grupo Aeroportuario del or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Barnes Group  vs.  Grupo Aeroportuario del

Barnes Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.

Grupo Aeroportuario del

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Aeroportuario del has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Grupo Aeroportuario is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Barnes and Grupo Aeroportuario

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

The idea behind Barnes Group and Grupo Aeroportuario del 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.