Correlation Between Carrier Global and AAON
Can any of the company-specific risk be diversified away by investing in both Carrier Global and AAON 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 Carrier Global and AAON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrier Global Corp and AAON Inc, you can compare the effects of market volatilities on Carrier Global and AAON 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 Carrier Global with a short position of AAON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and AAON.
Diversification Opportunities for Carrier Global and AAON
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Carrier and AAON is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and Carrier Global 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 Carrier Global Corp are associated (or correlated) with AAON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAON Inc has no effect on the direction of Carrier Global i.e., Carrier Global and AAON go up and down completely randomly.
Pair Corralation between Carrier Global and AAON
Given the investment horizon of 90 days Carrier Global Corp is expected to under-perform the AAON. But the stock apears to be less risky and, when comparing its historical volatility, Carrier Global Corp is 1.9 times less risky than AAON. The stock trades about -0.08 of its potential returns per unit of risk. The AAON Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 10,689 in AAON Inc on August 24, 2024 and sell it today you would earn a total of 2,867 from holding AAON Inc or generate 26.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrier Global Corp vs. AAON Inc
Performance |
| Timeline |
| Carrier Global Corp |
| AAON Inc |
Carrier Global and AAON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrier Global and AAON
The main advantage of trading using opposite Carrier Global and AAON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, AAON 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 AAON will offset losses from the drop in AAON's long position.| Carrier Global vs. Johnson Controls International | Carrier Global vs. Lennox International | Carrier Global vs. Masco | Carrier Global vs. Carlisle Companies Incorporated |
| AAON vs. Quanex Building Products | AAON vs. Gibraltar Industries | AAON vs. Armstrong World Industries | AAON vs. Beacon Roofing Supply |
Check out your portfolio center.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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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