Correlation Between Gulf Island and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both Gulf Island and Carpenter Technology 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 Gulf Island and Carpenter Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Island Fabrication and Carpenter Technology, you can compare the effects of market volatilities on Gulf Island and Carpenter Technology 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 Gulf Island with a short position of Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Island and Carpenter Technology.
Diversification Opportunities for Gulf Island and Carpenter Technology
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gulf and Carpenter is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Island Fabrication and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology and Gulf Island 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 Gulf Island Fabrication are associated (or correlated) with Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of Gulf Island i.e., Gulf Island and Carpenter Technology go up and down completely randomly.
Pair Corralation between Gulf Island and Carpenter Technology
Given the investment horizon of 90 days Gulf Island is expected to generate 1.59 times less return on investment than Carpenter Technology. But when comparing it to its historical volatility, Gulf Island Fabrication is 1.19 times less risky than Carpenter Technology. It trades about 0.04 of its potential returns per unit of risk. Carpenter Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17,903 in Carpenter Technology on November 18, 2024 and sell it today you would earn a total of 941.00 from holding Carpenter Technology or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gulf Island Fabrication vs. Carpenter Technology
Performance |
| Timeline |
| Gulf Island Fabrication |
| Carpenter Technology |
Gulf Island and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Island and Carpenter Technology
The main advantage of trading using opposite Gulf Island and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Island position performs unexpectedly, Carpenter Technology 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 Carpenter Technology will offset losses from the drop in Carpenter Technology's long position.| Gulf Island vs. Insteel Industries | Gulf Island vs. Mayville Engineering Co | Gulf Island vs. ESAB Corp | Gulf Island vs. Northwest Pipe |
| Carpenter Technology vs. Worthington Industries | Carpenter Technology vs. Ryerson Holding Corp | Carpenter Technology vs. Mueller Industries | Carpenter Technology vs. Allegheny Technologies Incorporated |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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