Correlation Between Carrier Global and TRAVIS PERKINS

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

By analyzing existing cross correlation between Carrier Global and TRAVIS PERKINS LS 1, you can compare the effects of market volatilities on Carrier Global and TRAVIS PERKINS 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 TRAVIS PERKINS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and TRAVIS PERKINS.

Diversification Opportunities for Carrier Global and TRAVIS PERKINS

0.49

Correlation Coefficient

Carrier Global  TRAVIS PERKINS

Very weak diversification

The 3 months correlation between Carrier and TRAVIS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global and TRAVIS PERKINS LS 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVIS PERKINS LS 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 TRAVIS PERKINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVIS PERKINS LS has no effect on the direction of Carrier Global i.e., Carrier Global and TRAVIS PERKINS go up and down completely randomly.

Pair Corralation between Carrier Global and TRAVIS PERKINS

Assuming the 90 days horizon Carrier Global is expected to generate 1.11 times more return on investment than TRAVIS PERKINS. However, Carrier Global is 1.11 times more volatile than TRAVIS PERKINS LS 1. It trades about -0.07 of its potential returns per unit of risk. TRAVIS PERKINS LS 1 is currently generating about -0.22 per unit of risk. If you would invest  7,140  in Carrier Global on September 22, 2024 and sell it today you would lose (735.00) from holding Carrier Global or give up 10.29% of portfolio value over 90 days.

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

Carrier Global  vs.  TRAVIS PERKINS LS 1

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

TRAVIS PERKINS LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRAVIS PERKINS LS 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Carrier Global and TRAVIS PERKINS

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

The idea behind Carrier Global and TRAVIS PERKINS LS 1 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..