Correlation Between Carpenter Technology and Proto Labs
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology and Proto Labs 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 Carpenter Technology and Proto Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carpenter Technology and Proto Labs, you can compare the effects of market volatilities on Carpenter Technology and Proto Labs 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 Carpenter Technology with a short position of Proto Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Proto Labs.
Diversification Opportunities for Carpenter Technology and Proto Labs
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Carpenter and Proto is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Proto Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proto Labs and Carpenter Technology 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 Carpenter Technology are associated (or correlated) with Proto Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proto Labs has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Proto Labs go up and down completely randomly.
Pair Corralation between Carpenter Technology and Proto Labs
Considering the 90-day investment horizon Carpenter Technology is expected to under-perform the Proto Labs. In addition to that, Carpenter Technology is 1.12 times more volatile than Proto Labs. It trades about -0.15 of its total potential returns per unit of risk. Proto Labs is currently generating about 0.29 per unit of volatility. If you would invest 3,854 in Proto Labs on November 18, 2024 and sell it today you would earn a total of 564.00 from holding Proto Labs or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carpenter Technology vs. Proto Labs
Performance |
| Timeline |
| Carpenter Technology |
| Proto Labs |
Carpenter Technology and Proto Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carpenter Technology and Proto Labs
The main advantage of trading using opposite Carpenter Technology and Proto Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology position performs unexpectedly, Proto Labs 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 Proto Labs will offset losses from the drop in Proto Labs' long position.| Carpenter Technology vs. Worthington Industries | Carpenter Technology vs. Ryerson Holding Corp | Carpenter Technology vs. Mueller Industries | Carpenter Technology vs. Allegheny Technologies Incorporated |
| Proto Labs vs. Northwest Pipe | Proto Labs vs. Tredegar | Proto Labs vs. Insteel Industries | Proto Labs vs. Ryerson Holding Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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