Correlation Between Carlyle and SWK Holdings
Can any of the company-specific risk be diversified away by investing in both Carlyle and SWK Holdings 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 SWK Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and SWK Holdings, you can compare the effects of market volatilities on Carlyle and SWK Holdings 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and SWK Holdings.
Diversification Opportunities for Carlyle and SWK Holdings
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carlyle and SWK is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and SWK Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings has no effect on the direction of Carlyle i.e., Carlyle and SWK Holdings go up and down completely randomly.
Pair Corralation between Carlyle and SWK Holdings
Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 6.75 times more return on investment than SWK Holdings. However, Carlyle is 6.75 times more volatile than SWK Holdings. It trades about 0.11 of its potential returns per unit of risk. SWK Holdings is currently generating about -0.03 per unit of risk. If you would invest 4,976 in Carlyle Group on August 25, 2024 and sell it today you would earn a total of 303.00 from holding Carlyle Group or generate 6.09% 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. SWK Holdings
Performance |
| Timeline |
| Carlyle Group |
| SWK Holdings |
Carlyle and SWK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and SWK Holdings
The main advantage of trading using opposite Carlyle and SWK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle position performs unexpectedly, SWK Holdings 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 SWK Holdings will offset losses from the drop in SWK Holdings' long position.| Carlyle vs. PowerUp Acquisition Corp | Carlyle vs. Aurora Innovation | Carlyle vs. HUMANA INC | Carlyle vs. Aquagold International |
| SWK Holdings vs. The Gap, | SWK Holdings vs. Valneva SE ADR | SWK Holdings vs. Arrow Electronics | SWK Holdings vs. National Vision Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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