Correlation Between Carlyle and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both Carlyle and CF 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 CF 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 CF Acquisition VII, you can compare the effects of market volatilities on Carlyle and CF 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 CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and CF Acquisition.
Diversification Opportunities for Carlyle and CF Acquisition
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carlyle and CFFSU is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and CF Acquisition VII in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition VII 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 CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition VII has no effect on the direction of Carlyle i.e., Carlyle and CF Acquisition go up and down completely randomly.
Pair Corralation between Carlyle and CF Acquisition
Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 9.76 times more return on investment than CF Acquisition. However, Carlyle is 9.76 times more volatile than CF Acquisition VII. It trades about 0.09 of its potential returns per unit of risk. CF Acquisition VII is currently generating about 0.09 per unit of risk. If you would invest 4,275 in Carlyle Group on September 1, 2024 and sell it today you would earn a total of 1,048 from holding Carlyle Group or generate 24.51% 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. CF Acquisition VII
Performance |
| Timeline |
| Carlyle Group |
| CF Acquisition VII |
Carlyle and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and CF Acquisition
The main advantage of trading using opposite Carlyle and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle position performs unexpectedly, CF 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 CF Acquisition will offset losses from the drop in CF Acquisition's long position.| Carlyle vs. Apollo Global Management | Carlyle vs. Blackstone Group | Carlyle vs. Brookfield Asset Management | Carlyle vs. Ares Management LP |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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