Correlation Between Carrier Global and Lennox International
Can any of the company-specific risk be diversified away by investing in both Carrier Global and Lennox International 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 Lennox International 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 Lennox International, you can compare the effects of market volatilities on Carrier Global and Lennox International 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 Lennox International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and Lennox International.
Diversification Opportunities for Carrier Global and Lennox International
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carrier and Lennox is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and Lennox International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennox International 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 Lennox International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennox International has no effect on the direction of Carrier Global i.e., Carrier Global and Lennox International go up and down completely randomly.
Pair Corralation between Carrier Global and Lennox International
Given the investment horizon of 90 days Carrier Global is expected to generate 1.0 times less return on investment than Lennox International. In addition to that, Carrier Global is 1.06 times more volatile than Lennox International. It trades about 0.11 of its total potential returns per unit of risk. Lennox International is currently generating about 0.11 per unit of volatility. If you would invest 46,825 in Lennox International on August 27, 2024 and sell it today you would earn a total of 18,944 from holding Lennox International or generate 40.46% 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. Lennox International
Performance |
| Timeline |
| Carrier Global Corp |
| Lennox International |
Carrier Global and Lennox International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrier Global and Lennox International
The main advantage of trading using opposite Carrier Global and Lennox International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, Lennox International 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 Lennox International will offset losses from the drop in Lennox International's long position.| Carrier Global vs. Johnson Controls International | Carrier Global vs. Lennox International | Carrier Global vs. Masco | Carrier Global vs. Carlisle Companies Incorporated |
| Lennox International vs. Carrier Global Corp | Lennox International vs. Johnson Controls International | Lennox International vs. Masco | Lennox International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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