Correlation Between Carrier Global and Intel

Can any of the company-specific risk be diversified away by investing in both Carrier Global and Intel 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 Carrier Global and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carrier Global and Intel, you can compare the effects of market volatilities on Carrier Global and Intel 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 Carrier Global with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and Intel.

Diversification Opportunities for Carrier Global and Intel

0.41

Correlation Coefficient

Carrier Global  Intel

Very weak diversification

The 3 months correlation between Carrier and Intel is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Carrier Global 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 Carrier Global are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Carrier Global i.e., Carrier Global and Intel go up and down completely randomly.

Pair Corralation between Carrier Global and Intel

Assuming the 90 days horizon Carrier Global is expected to generate 0.5 times more return on investment than Intel. However, Carrier Global is 1.99 times less risky than Intel. It trades about 0.06 of its potential returns per unit of risk. Intel is currently generating about -0.06 per unit of risk. If you would invest  5,818  in Carrier Global on October 1, 2024 and sell it today you would earn a total of  800.00  from holding Carrier Global or generate 13.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Carrier Global  vs.  Intel

Carrier Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrier Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Carrier Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Carrier Global and Intel

The main advantage of trading using opposite Carrier Global and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrier Global position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.

The idea behind Carrier Global and Intel 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.