Correlation Between 70082LAB3 and CARPENTER

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Can any of the company-specific risk be diversified away by investing in both 70082LAB3 and CARPENTER 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 70082LAB3 and CARPENTER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US70082LAB36 and CARPENTER TECHNOLOGY P, you can compare the effects of market volatilities on 70082LAB3 and CARPENTER 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 70082LAB3 with a short position of CARPENTER. Check out your portfolio center. Please also check ongoing floating volatility patterns of 70082LAB3 and CARPENTER.

Diversification Opportunities for 70082LAB3 and CARPENTER

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between 70082LAB3 and CARPENTER is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding US70082LAB36 and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER TECHNOLOGY and 70082LAB3 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 US70082LAB36 are associated (or correlated) with CARPENTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARPENTER TECHNOLOGY has no effect on the direction of 70082LAB3 i.e., 70082LAB3 and CARPENTER go up and down completely randomly.

Pair Corralation between 70082LAB3 and CARPENTER

Assuming the 90 days trading horizon US70082LAB36 is expected to generate 1.88 times more return on investment than CARPENTER. However, 70082LAB3 is 1.88 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.3 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about -0.01 per unit of risk. If you would invest  8,780  in US70082LAB36 on October 22, 2024 and sell it today you would earn a total of  220.00  from holding US70082LAB36 or generate 2.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy50.0%
ValuesDaily Returns

US70082LAB36  vs.  CARPENTER TECHNOLOGY P

 Performance 
       Timeline  
US70082LAB36 

Risk-Adjusted Performance

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Over the last 90 days US70082LAB36 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 70082LAB3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
CARPENTER TECHNOLOGY 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

70082LAB3 and CARPENTER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 70082LAB3 and CARPENTER

The main advantage of trading using opposite 70082LAB3 and CARPENTER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 70082LAB3 position performs unexpectedly, CARPENTER 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 CARPENTER will offset losses from the drop in CARPENTER's long position.
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The idea behind US70082LAB36 and CARPENTER TECHNOLOGY P pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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