Correlation Between Barnes and Xometry

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

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

Diversification Opportunities for Barnes and Xometry

0.55

Correlation Coefficient

Barnes  Xometry

Very weak diversification

The 3 months correlation between Barnes and Xometry is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Xometry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xometry 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 Xometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xometry has no effect on the direction of Barnes i.e., Barnes and Xometry go up and down completely randomly.

Pair Corralation between Barnes and Xometry

Taking into account the 90-day investment horizon Barnes is expected to generate 4.64 times less return on investment than Xometry. But when comparing it to its historical volatility, Barnes Group is 2.55 times less risky than Xometry. It trades about 0.16 of its potential returns per unit of risk. Xometry is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,854  in Xometry on September 22, 2024 and sell it today you would earn a total of  2,313  from holding Xometry or generate 124.76% return on investment over 90 days.

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

Barnes Group  vs.  Xometry

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.

Xometry

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xometry are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Xometry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barnes and Xometry

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

The idea behind Barnes Group and Xometry 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.