Correlation Between Carrier Global and Trex
Can any of the company-specific risk be diversified away by investing in both Carrier Global and Trex 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 Trex 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 Trex Company, you can compare the effects of market volatilities on Carrier Global and Trex 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 Trex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and Trex.
Diversification Opportunities for Carrier Global and Trex
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Carrier and Trex is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and Trex Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trex Company 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 Trex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trex Company has no effect on the direction of Carrier Global i.e., Carrier Global and Trex go up and down completely randomly.
Pair Corralation between Carrier Global and Trex
Given the investment horizon of 90 days Carrier Global is expected to generate 1.28 times less return on investment than Trex. But when comparing it to its historical volatility, Carrier Global Corp is 1.69 times less risky than Trex. It trades about 0.15 of its potential returns per unit of risk. Trex Company is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,056 in Trex Company on August 31, 2024 and sell it today you would earn a total of 387.00 from holding Trex Company or generate 5.48% 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. Trex Company
Performance |
| Timeline |
| Carrier Global Corp |
| Trex Company |
Carrier Global and Trex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrier Global and Trex
The main advantage of trading using opposite Carrier Global and Trex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, Trex 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 Trex will offset losses from the drop in Trex's long position.| Carrier Global vs. Johnson Controls International | Carrier Global vs. Lennox International | Carrier Global vs. Masco | Carrier Global vs. Carlisle Companies Incorporated |
| Trex vs. Quanex Building Products | Trex vs. Armstrong World Industries | Trex vs. Gibraltar Industries | Trex vs. Apogee Enterprises |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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