Correlation Between Lennox International and Carrier Global
Can any of the company-specific risk be diversified away by investing in both Lennox International 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 Lennox International and Carrier Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennox International and Carrier Global Corp, you can compare the effects of market volatilities on Lennox International 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 Lennox International with a short position of Carrier Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennox International and Carrier Global.
Diversification Opportunities for Lennox International and Carrier Global
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lennox and Carrier is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lennox International 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 Lennox International 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 Lennox International 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 Lennox International i.e., Lennox International and Carrier Global go up and down completely randomly.
Pair Corralation between Lennox International and Carrier Global
Considering the 90-day investment horizon Lennox International is expected to generate 0.95 times more return on investment than Carrier Global. However, Lennox International is 1.05 times less risky than Carrier Global. It trades about 0.1 of its potential returns per unit of risk. Carrier Global Corp is currently generating about 0.06 per unit of risk. If you would invest 42,917 in Lennox International on October 20, 2024 and sell it today you would earn a total of 21,829 from holding Lennox International or generate 50.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lennox International vs. Carrier Global Corp
Performance |
| Timeline |
| Lennox International |
| Carrier Global Corp |
Lennox International and Carrier Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennox International and Carrier Global
The main advantage of trading using opposite Lennox International and Carrier Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennox International 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.| Lennox International vs. Carrier Global Corp | Lennox International vs. Johnson Controls International | Lennox International vs. Masco | Lennox International vs. Carlisle Companies Incorporated |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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