Correlation Between Carrier Global and Quanex Building
Can any of the company-specific risk be diversified away by investing in both Carrier Global and Quanex Building 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 Quanex Building 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 Quanex Building Products, you can compare the effects of market volatilities on Carrier Global and Quanex Building 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 Quanex Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and Quanex Building.
Diversification Opportunities for Carrier Global and Quanex Building
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Carrier and Quanex is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and Quanex Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanex Building Products 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 Quanex Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanex Building Products has no effect on the direction of Carrier Global i.e., Carrier Global and Quanex Building go up and down completely randomly.
Pair Corralation between Carrier Global and Quanex Building
Given the investment horizon of 90 days Carrier Global Corp is expected to generate 0.66 times more return on investment than Quanex Building. However, Carrier Global Corp is 1.51 times less risky than Quanex Building. It trades about 0.11 of its potential returns per unit of risk. Quanex Building Products is currently generating about -0.01 per unit of risk. If you would invest 5,510 in Carrier Global Corp on August 27, 2024 and sell it today you would earn a total of 2,190 from holding Carrier Global Corp or generate 39.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrier Global Corp vs. Quanex Building Products
Performance |
| Timeline |
| Carrier Global Corp |
| Quanex Building Products |
Carrier Global and Quanex Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrier Global and Quanex Building
The main advantage of trading using opposite Carrier Global and Quanex Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, Quanex Building 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 Quanex Building will offset losses from the drop in Quanex Building's long position.| Carrier Global vs. Johnson Controls International | Carrier Global vs. Lennox International | Carrier Global vs. Masco | Carrier Global vs. Carlisle Companies Incorporated |
| Quanex Building vs. Trex Company | Quanex Building vs. Gibraltar Industries | Quanex Building vs. Travis Perkins PLC | Quanex Building vs. Janus International Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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