Correlation Between Barnes and Oshkosh

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

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

Diversification Opportunities for Barnes and Oshkosh

0.22

Correlation Coefficient

Barnes  Oshkosh

Modest diversification

The 3 months correlation between Barnes and Oshkosh is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Oshkosh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshkosh 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 Oshkosh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshkosh has no effect on the direction of Barnes i.e., Barnes and Oshkosh go up and down completely randomly.

Pair Corralation between Barnes and Oshkosh

Taking into account the 90-day investment horizon Barnes is expected to generate 3.84 times less return on investment than Oshkosh. But when comparing it to its historical volatility, Barnes Group is 38.16 times less risky than Oshkosh. It trades about 0.34 of its potential returns per unit of risk. Oshkosh is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,366  in Oshkosh on December 28, 2024 and sell it today you would earn a total of  340.00  from holding Oshkosh or generate 3.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	30.0%
Values	Daily Returns

Barnes Group  vs.  Oshkosh

Barnes Group

Risk-Adjusted Performance

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.

Oshkosh

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oshkosh are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Oshkosh is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Barnes and Oshkosh

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

The idea behind Barnes Group and Oshkosh 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.