Correlation Between Carlyle and XAI Octagon
Can any of the company-specific risk be diversified away by investing in both Carlyle and XAI Octagon 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 XAI Octagon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and XAI Octagon Floating, you can compare the effects of market volatilities on Carlyle and XAI Octagon 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 XAI Octagon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and XAI Octagon.
Diversification Opportunities for Carlyle and XAI Octagon
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Carlyle and XAI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating 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 XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of Carlyle i.e., Carlyle and XAI Octagon go up and down completely randomly.
Pair Corralation between Carlyle and XAI Octagon
Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 2.34 times more return on investment than XAI Octagon. However, Carlyle is 2.34 times more volatile than XAI Octagon Floating. It trades about 0.07 of its potential returns per unit of risk. XAI Octagon Floating is currently generating about 0.08 per unit of risk. If you would invest 2,874 in Carlyle Group on August 28, 2024 and sell it today you would earn a total of 2,565 from holding Carlyle Group or generate 89.25% 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. XAI Octagon Floating
Performance |
| Timeline |
| Carlyle Group |
| XAI Octagon Floating |
Carlyle and XAI Octagon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and XAI Octagon
The main advantage of trading using opposite Carlyle and XAI Octagon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle position performs unexpectedly, XAI Octagon 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 XAI Octagon will offset losses from the drop in XAI Octagon's long position.| Carlyle vs. Aurora Innovation | Carlyle vs. HUMANA INC | Carlyle vs. Aquagold International | Carlyle vs. Barloworld Ltd ADR |
| XAI Octagon vs. Oxford Lane Capital | XAI Octagon vs. Capital Southwest | XAI Octagon vs. Cornerstone Strategic Return | XAI Octagon vs. Cornerstone Strategic Value |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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