Correlation Between Carpenter Technology and Worthington Industries
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology and Worthington Industries 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 Worthington Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carpenter Technology and Worthington Industries, you can compare the effects of market volatilities on Carpenter Technology and Worthington Industries 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 Worthington Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Worthington Industries.
Diversification Opportunities for Carpenter Technology and Worthington Industries
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carpenter and Worthington is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Worthington Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Industries 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 Worthington Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Industries has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Worthington Industries go up and down completely randomly.
Pair Corralation between Carpenter Technology and Worthington Industries
Considering the 90-day investment horizon Carpenter Technology is expected to generate 1.28 times more return on investment than Worthington Industries. However, Carpenter Technology is 1.28 times more volatile than Worthington Industries. It trades about 0.2 of its potential returns per unit of risk. Worthington Industries is currently generating about 0.05 per unit of risk. If you would invest 15,676 in Carpenter Technology on August 24, 2024 and sell it today you would earn a total of 2,395 from holding Carpenter Technology or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carpenter Technology vs. Worthington Industries
Performance |
| Timeline |
| Carpenter Technology |
| Worthington Industries |
Carpenter Technology and Worthington Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carpenter Technology and Worthington Industries
The main advantage of trading using opposite Carpenter Technology and Worthington Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology position performs unexpectedly, Worthington Industries 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 Worthington Industries will offset losses from the drop in Worthington Industries' long position.| Carpenter Technology vs. Haynes International | Carpenter Technology vs. Worthington Industries | Carpenter Technology vs. Ryerson Holding Corp | Carpenter Technology vs. Mueller Industries |
| Worthington Industries vs. Allegheny Technologies Incorporated | Worthington Industries vs. Haynes International | Worthington Industries vs. ESAB Corp | Worthington Industries vs. Insteel Industries |
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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