Correlation Between Owens Corning and Carrier Global
Can any of the company-specific risk be diversified away by investing in both Owens Corning 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 Owens Corning and Carrier Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Owens Corning and Carrier Global Corp, you can compare the effects of market volatilities on Owens Corning 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 Owens Corning with a short position of Carrier Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Owens Corning and Carrier Global.
Diversification Opportunities for Owens Corning and Carrier Global
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Owens and Carrier is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Owens Corning 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 Owens Corning 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 Owens Corning 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 Owens Corning i.e., Owens Corning and Carrier Global go up and down completely randomly.
Pair Corralation between Owens Corning and Carrier Global
Allowing for the 90-day total investment horizon Owens Corning is expected to generate 1.34 times more return on investment than Carrier Global. However, Owens Corning is 1.34 times more volatile than Carrier Global Corp. It trades about 0.38 of its potential returns per unit of risk. Carrier Global Corp is currently generating about 0.07 per unit of risk. If you would invest 18,505 in Owens Corning on August 27, 2024 and sell it today you would earn a total of 2,576 from holding Owens Corning or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Owens Corning vs. Carrier Global Corp
Performance |
| Timeline |
| Owens Corning |
| Carrier Global Corp |
Owens Corning and Carrier Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Owens Corning and Carrier Global
The main advantage of trading using opposite Owens Corning and Carrier Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Owens Corning 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.| Owens Corning vs. Trex Company | Owens Corning vs. Gibraltar Industries | Owens Corning vs. Travis Perkins PLC | Owens Corning vs. Janus International Group |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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