Correlation Between Worthington Industries and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both Worthington Industries and Carpenter Technology 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 Worthington Industries and Carpenter Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worthington Industries and Carpenter Technology, you can compare the effects of market volatilities on Worthington Industries and Carpenter Technology 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 Worthington Industries with a short position of Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Industries and Carpenter Technology.
Diversification Opportunities for Worthington Industries and Carpenter Technology
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Worthington and Carpenter is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Industries and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology and Worthington Industries 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 Worthington Industries are associated (or correlated) with Carpenter Technology. 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 Worthington Industries i.e., Worthington Industries and Carpenter Technology go up and down completely randomly.
Pair Corralation between Worthington Industries and Carpenter Technology
Considering the 90-day investment horizon Worthington Industries is expected to generate 5.61 times less return on investment than Carpenter Technology. But when comparing it to its historical volatility, Worthington Industries is 1.28 times less risky than Carpenter Technology. It trades about 0.05 of its potential returns per unit of risk. Carpenter Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 15,676 in Carpenter Technology on August 24, 2024 and sell it today you would earn a total of 2,395 from holding Carpenter Technology or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worthington Industries vs. Carpenter Technology
Performance |
| Timeline |
| Worthington Industries |
| Carpenter Technology |
Worthington Industries and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worthington Industries and Carpenter Technology
The main advantage of trading using opposite Worthington Industries and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Industries position performs unexpectedly, Carpenter Technology 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 Technology will offset losses from the drop in Carpenter Technology's long position.| Worthington Industries vs. Allegheny Technologies Incorporated | Worthington Industries vs. Haynes International | Worthington Industries vs. ESAB Corp | Worthington Industries vs. Insteel Industries |
| Carpenter Technology vs. Haynes International | Carpenter Technology vs. Worthington Industries | Carpenter Technology vs. Ryerson Holding Corp | Carpenter Technology vs. Mueller Industries |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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