Correlation Between Limbach Holdings and Carlisle Companies
Can any of the company-specific risk be diversified away by investing in both Limbach Holdings 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 Limbach Holdings and Carlisle Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Limbach Holdings and Carlisle Companies Incorporated, you can compare the effects of market volatilities on Limbach Holdings 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 Limbach Holdings with a short position of Carlisle Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Limbach Holdings and Carlisle Companies.
Diversification Opportunities for Limbach Holdings and Carlisle Companies
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Limbach and Carlisle is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Limbach Holdings and Carlisle Companies Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlisle Companies and Limbach Holdings 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 Limbach Holdings 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 Limbach Holdings i.e., Limbach Holdings and Carlisle Companies go up and down completely randomly.
Pair Corralation between Limbach Holdings and Carlisle Companies
Considering the 90-day investment horizon Limbach Holdings is expected to generate 2.13 times more return on investment than Carlisle Companies. However, Limbach Holdings is 2.13 times more volatile than Carlisle Companies Incorporated. It trades about 0.14 of its potential returns per unit of risk. Carlisle Companies Incorporated is currently generating about 0.09 per unit of risk. If you would invest 1,278 in Limbach Holdings on August 27, 2024 and sell it today you would earn a total of 8,986 from holding Limbach Holdings or generate 703.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Limbach Holdings vs. Carlisle Companies Incorporate
Performance |
| Timeline |
| Limbach Holdings |
| Carlisle Companies |
Limbach Holdings and Carlisle Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Limbach Holdings and Carlisle Companies
The main advantage of trading using opposite Limbach Holdings and Carlisle Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Limbach Holdings 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.| Limbach Holdings vs. MYR Group | Limbach Holdings vs. Granite Construction Incorporated | Limbach Holdings vs. Construction Partners | Limbach Holdings vs. Great Lakes Dredge |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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