Correlation Between Lixil Group and Carrier Global
Can any of the company-specific risk be diversified away by investing in both Lixil Group and Carrier Global 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 Lixil Group and Carrier Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lixil Group Corp and Carrier Global Corp, you can compare the effects of market volatilities on Lixil Group and Carrier Global 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 Lixil Group with a short position of Carrier Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lixil Group and Carrier Global.
Diversification Opportunities for Lixil Group and Carrier Global
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lixil and Carrier is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lixil Group Corp and Carrier Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrier Global Corp and Lixil Group 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 Lixil Group Corp are associated (or correlated) with Carrier Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrier Global Corp has no effect on the direction of Lixil Group i.e., Lixil Group and Carrier Global go up and down completely randomly.
Pair Corralation between Lixil Group and Carrier Global
Assuming the 90 days horizon Lixil Group Corp is expected to under-perform the Carrier Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lixil Group Corp is 1.36 times less risky than Carrier Global. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Carrier Global Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,259 in Carrier Global Corp on August 30, 2024 and sell it today you would earn a total of 431.00 from holding Carrier Global Corp or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lixil Group Corp vs. Carrier Global Corp
Performance |
| Timeline |
| Lixil Group Corp |
| Carrier Global Corp |
Lixil Group and Carrier Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lixil Group and Carrier Global
The main advantage of trading using opposite Lixil Group and Carrier Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lixil Group position performs unexpectedly, Carrier Global 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 Carrier Global will offset losses from the drop in Carrier Global's long position.| Lixil Group vs. Masco | Lixil Group vs. Carrier Global Corp | Lixil Group vs. Daikin IndustriesLtd | Lixil Group vs. Lennox International |
| Carrier Global vs. Johnson Controls International | Carrier Global vs. Lennox International | Carrier Global vs. Masco | Carrier Global vs. Carlisle Companies 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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