Correlation Between Barnes and NN

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

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

Diversification Opportunities for Barnes and NN

-0.12

Correlation Coefficient

Barnes  NN

Good diversification

The 3 months correlation between Barnes and NN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN 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 NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Barnes i.e., Barnes and NN go up and down completely randomly.

Pair Corralation between Barnes and NN

Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.02 times more return on investment than NN. However, Barnes Group is 41.88 times less risky than NN. It trades about 0.31 of its potential returns per unit of risk. NN Inc is currently generating about -0.43 per unit of risk. If you would invest  4,702  in Barnes Group on October 10, 2024 and sell it today you would earn a total of  23.00  from holding Barnes Group or generate 0.49% return on investment over 90 days.

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

Barnes Group  vs.  NN Inc

Barnes Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. 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.

NN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Barnes and NN

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

The idea behind Barnes Group and NN 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.