Correlation Between Enerpac Tool and Barnes

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

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

Diversification Opportunities for Enerpac Tool and Barnes

0.4

Correlation Coefficient

Enerpac Tool  Barnes

Very weak diversification

The 3 months correlation between Enerpac and Barnes is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and Enerpac Tool 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 Enerpac Tool Group are associated (or correlated) with Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Enerpac Tool i.e., Enerpac Tool and Barnes go up and down completely randomly.

Pair Corralation between Enerpac Tool and Barnes

Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 25.53 times more return on investment than Barnes. However, Enerpac Tool is 25.53 times more volatile than Barnes Group. It trades about 0.1 of its potential returns per unit of risk. Barnes Group is currently generating about 0.39 per unit of risk. If you would invest  4,138  in Enerpac Tool Group on December 27, 2024 and sell it today you would earn a total of  484.00  from holding Enerpac Tool Group or generate 11.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	31.15%
Values	Daily Returns

Enerpac Tool Group  vs.  Barnes Group

Enerpac Tool Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Enerpac Tool and Barnes

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

The idea behind Enerpac Tool Group and Barnes Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.