Correlation Between IBC Advanced and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both IBC Advanced 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 IBC Advanced and Carpenter Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBC Advanced Alloys and Carpenter Technology, you can compare the effects of market volatilities on IBC Advanced 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 IBC Advanced with a short position of Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBC Advanced and Carpenter Technology.
Diversification Opportunities for IBC Advanced and Carpenter Technology
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IBC and Carpenter is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding IBC Advanced Alloys and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology and IBC Advanced 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 IBC Advanced Alloys 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 IBC Advanced i.e., IBC Advanced and Carpenter Technology go up and down completely randomly.
Pair Corralation between IBC Advanced and Carpenter Technology
Assuming the 90 days horizon IBC Advanced Alloys is expected to under-perform the Carpenter Technology. In addition to that, IBC Advanced is 2.54 times more volatile than Carpenter Technology. It trades about -0.06 of its total potential returns per unit of risk. Carpenter Technology is currently generating about 0.37 per unit of volatility. If you would invest 15,536 in Carpenter Technology on September 2, 2024 and sell it today you would earn a total of 3,868 from holding Carpenter Technology or generate 24.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IBC Advanced Alloys vs. Carpenter Technology
Performance |
| Timeline |
| IBC Advanced Alloys |
| Carpenter Technology |
IBC Advanced and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBC Advanced and Carpenter Technology
The main advantage of trading using opposite IBC Advanced and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBC Advanced 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.| IBC Advanced vs. Carpenter Technology | IBC Advanced vs. Mueller Industries | IBC Advanced vs. Allegheny Technologies Incorporated | IBC Advanced vs. ESAB Corp |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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