Correlation Between Carrier Global and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both Carrier Global and Johnson Controls 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 Johnson Controls 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 Johnson Controls International, you can compare the effects of market volatilities on Carrier Global and Johnson Controls 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 Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and Johnson Controls.
Diversification Opportunities for Carrier Global and Johnson Controls
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carrier and Johnson is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int 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 Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Carrier Global i.e., Carrier Global and Johnson Controls go up and down completely randomly.
Pair Corralation between Carrier Global and Johnson Controls
Given the investment horizon of 90 days Carrier Global is expected to generate 1.51 times less return on investment than Johnson Controls. In addition to that, Carrier Global is 1.19 times more volatile than Johnson Controls International. It trades about 0.06 of its total potential returns per unit of risk. Johnson Controls International is currently generating about 0.12 per unit of volatility. If you would invest 5,389 in Johnson Controls International on October 20, 2024 and sell it today you would earn a total of 2,725 from holding Johnson Controls International or generate 50.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrier Global Corp vs. Johnson Controls International
Performance |
| Timeline |
| Carrier Global Corp |
| Johnson Controls Int |
Carrier Global and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrier Global and Johnson Controls
The main advantage of trading using opposite Carrier Global and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| Carrier Global vs. Johnson Controls International | Carrier Global vs. Lennox International | Carrier Global vs. Masco | Carrier Global vs. Carlisle Companies Incorporated |
| Johnson Controls vs. Carrier Global Corp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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