Correlation Between Carrier Global and Carlisle Companies
Can any of the company-specific risk be diversified away by investing in both Carrier Global and Carlisle Companies 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 Carlisle Companies 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 Carlisle Companies Incorporated, you can compare the effects of market volatilities on Carrier Global and Carlisle Companies 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 Carlisle Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and Carlisle Companies.
Diversification Opportunities for Carrier Global and Carlisle Companies
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carrier and Carlisle is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and Carlisle Companies Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlisle Companies 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 Carlisle Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlisle Companies has no effect on the direction of Carrier Global i.e., Carrier Global and Carlisle Companies go up and down completely randomly.
Pair Corralation between Carrier Global and Carlisle Companies
Given the investment horizon of 90 days Carrier Global Corp is expected to under-perform the Carlisle Companies. In addition to that, Carrier Global is 1.01 times more volatile than Carlisle Companies Incorporated. It trades about -0.08 of its total potential returns per unit of risk. Carlisle Companies Incorporated is currently generating about -0.06 per unit of volatility. If you would invest 45,783 in Carlisle Companies Incorporated on August 24, 2024 and sell it today you would lose (1,631) from holding Carlisle Companies Incorporated or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrier Global Corp vs. Carlisle Companies Incorporate
Performance |
| Timeline |
| Carrier Global Corp |
| Carlisle Companies |
Carrier Global and Carlisle Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrier Global and Carlisle Companies
The main advantage of trading using opposite Carrier Global and Carlisle Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, Carlisle Companies 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 Carlisle Companies will offset losses from the drop in Carlisle Companies' long position.| Carrier Global vs. Johnson Controls International | Carrier Global vs. Lennox International | Carrier Global vs. Masco | Carrier Global vs. Carlisle Companies Incorporated |
| Carlisle Companies vs. Lennox International | Carlisle Companies vs. Fortune Brands Innovations | Carlisle Companies vs. Trane Technologies plc | Carlisle Companies vs. Johnson Controls International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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