Correlation Between Masco and Carrier Global
Can any of the company-specific risk be diversified away by investing in both Masco 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 Masco and Carrier Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masco and Carrier Global Corp, you can compare the effects of market volatilities on Masco 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 Masco with a short position of Carrier Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masco and Carrier Global.
Diversification Opportunities for Masco and Carrier Global
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Masco and Carrier is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Masco 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 Masco 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 Masco 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 Masco i.e., Masco and Carrier Global go up and down completely randomly.
Pair Corralation between Masco and Carrier Global
Considering the 90-day investment horizon Masco is expected to generate 0.89 times more return on investment than Carrier Global. However, Masco is 1.12 times less risky than Carrier Global. It trades about 0.35 of its potential returns per unit of risk. Carrier Global Corp is currently generating about -0.16 per unit of risk. If you would invest 7,257 in Masco on November 1, 2024 and sell it today you would earn a total of 712.00 from holding Masco or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Masco vs. Carrier Global Corp
Performance |
| Timeline |
| Masco |
| Carrier Global Corp |
Masco and Carrier Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masco and Carrier Global
The main advantage of trading using opposite Masco and Carrier Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masco 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.| Masco vs. Trane Technologies plc | Masco vs. Quanex Building Products | Masco vs. Jeld Wen Holding | Masco vs. Azek Company |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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