Correlation Between Carrier Global and Compagnie
Can any of the company-specific risk be diversified away by investing in both Carrier Global and Compagnie 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 Compagnie 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 Compagnie de Saint Gobain, you can compare the effects of market volatilities on Carrier Global and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and Compagnie.
Diversification Opportunities for Carrier Global and Compagnie
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carrier and Compagnie is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Carrier Global i.e., Carrier Global and Compagnie go up and down completely randomly.
Pair Corralation between Carrier Global and Compagnie
Given the investment horizon of 90 days Carrier Global Corp is expected to generate 0.79 times more return on investment than Compagnie. However, Carrier Global Corp is 1.27 times less risky than Compagnie. It trades about 0.15 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.06 per unit of risk. If you would invest 7,566 in Carrier Global Corp on August 27, 2024 and sell it today you would earn a total of 321.00 from holding Carrier Global Corp or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrier Global Corp vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| Carrier Global Corp |
| Compagnie de Saint |
Carrier Global and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrier Global and Compagnie
The main advantage of trading using opposite Carrier Global and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Carrier Global vs. Johnson Controls International | Carrier Global vs. Lennox International | Carrier Global vs. Masco | Carrier Global vs. Carlisle Companies Incorporated |
| Compagnie vs. Trane Technologies plc | Compagnie vs. AAON Inc | Compagnie vs. Quanex Building Products | Compagnie vs. Gibraltar Industries |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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