Correlation Between Johnson Controls and Carlisle Companies
Can any of the company-specific risk be diversified away by investing in both Johnson Controls and Carlisle Companies 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 Johnson Controls and Carlisle Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Controls International and Carlisle Companies Incorporated, you can compare the effects of market volatilities on Johnson Controls and Carlisle Companies 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 Johnson Controls with a short position of Carlisle Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and Carlisle Companies.
Diversification Opportunities for Johnson Controls and Carlisle Companies
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Carlisle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and Carlisle Companies Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlisle Companies and Johnson Controls 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 Johnson Controls International are associated (or correlated) with Carlisle Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlisle Companies has no effect on the direction of Johnson Controls i.e., Johnson Controls and Carlisle Companies go up and down completely randomly.
Pair Corralation between Johnson Controls and Carlisle Companies
Considering the 90-day investment horizon Johnson Controls is expected to generate 2.04 times less return on investment than Carlisle Companies. But when comparing it to its historical volatility, Johnson Controls International is 1.08 times less risky than Carlisle Companies. It trades about 0.05 of its potential returns per unit of risk. Carlisle Companies Incorporated is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 24,142 in Carlisle Companies Incorporated on August 27, 2024 and sell it today you would earn a total of 20,823 from holding Carlisle Companies Incorporated or generate 86.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Controls International vs. Carlisle Companies Incorporate
Performance |
| Timeline |
| Johnson Controls Int |
| Carlisle Companies |
Johnson Controls and Carlisle Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Controls and Carlisle Companies
The main advantage of trading using opposite Johnson Controls and Carlisle Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Controls position performs unexpectedly, Carlisle Companies 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 Carlisle Companies will offset losses from the drop in Carlisle Companies' long position.| Johnson Controls vs. Carrier Global Corp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
| Carlisle Companies vs. Lennox International | Carlisle Companies vs. Fortune Brands Innovations | Carlisle Companies vs. Trane Technologies plc | Carlisle Companies vs. Johnson Controls International |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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