Correlation Between Carlyle and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both Carlyle and APx Acquisition 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 Carlyle and APx Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and APx Acquisition I, you can compare the effects of market volatilities on Carlyle and APx Acquisition 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 Carlyle with a short position of APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and APx Acquisition.
Diversification Opportunities for Carlyle and APx Acquisition
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carlyle and APx is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and APx Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition I and Carlyle 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 Carlyle Group are associated (or correlated) with APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition I has no effect on the direction of Carlyle i.e., Carlyle and APx Acquisition go up and down completely randomly.
Pair Corralation between Carlyle and APx Acquisition
Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 13.88 times more return on investment than APx Acquisition. However, Carlyle is 13.88 times more volatile than APx Acquisition I. It trades about 0.11 of its potential returns per unit of risk. APx Acquisition I is currently generating about 0.17 per unit of risk. If you would invest 4,006 in Carlyle Group on September 5, 2024 and sell it today you would earn a total of 1,242 from holding Carlyle Group or generate 31.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlyle Group vs. APx Acquisition I
Performance |
| Timeline |
| Carlyle Group |
| APx Acquisition I |
Carlyle and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and APx Acquisition
The main advantage of trading using opposite Carlyle and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle position performs unexpectedly, APx Acquisition 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 APx Acquisition will offset losses from the drop in APx Acquisition's long position.| Carlyle vs. Visa Class A | Carlyle vs. Diamond Hill Investment | Carlyle vs. Associated Capital Group | Carlyle vs. Deutsche Bank AG |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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