Correlation Between Barnes and Zeo Energy

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

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

Diversification Opportunities for Barnes and Zeo Energy

-0.43

Correlation Coefficient

Barnes  Zeo Energy

Very good diversification

The 3 months correlation between Barnes and Zeo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and Zeo Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeo Energy Corp 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 Zeo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeo Energy Corp has no effect on the direction of Barnes i.e., Barnes and Zeo Energy go up and down completely randomly.

Pair Corralation between Barnes and Zeo Energy

Taking into account the 90-day investment horizon Barnes is expected to generate 6.43 times less return on investment than Zeo Energy. But when comparing it to its historical volatility, Barnes Group is 11.5 times less risky than Zeo Energy. It trades about 0.19 of its potential returns per unit of risk. Zeo Energy Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  175.00  in Zeo Energy Corp on September 13, 2024 and sell it today you would earn a total of  114.00  from holding Zeo Energy Corp or generate 65.14% return on investment over 90 days.

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

Barnes Group  vs.  Zeo Energy Corp

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 unfluctuating fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.

Zeo Energy Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zeo Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Zeo Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barnes and Zeo Energy

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

The idea behind Barnes Group and Zeo Energy Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.