Correlation Between Carpenter Technology and NV Bekaert

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

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

Diversification Opportunities for Carpenter Technology and NV Bekaert

-0.42

Correlation Coefficient

Carpenter Technology  NV Bekaert

Very good diversification

The 3 months correlation between Carpenter and BEKAY is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA and Carpenter Technology 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 Carpenter Technology are associated (or correlated) with NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and NV Bekaert go up and down completely randomly.

Pair Corralation between Carpenter Technology and NV Bekaert

Considering the 90-day investment horizon Carpenter Technology is expected to generate 1.27 times more return on investment than NV Bekaert. However, Carpenter Technology is 1.27 times more volatile than NV Bekaert SA. It trades about 0.06 of its potential returns per unit of risk. NV Bekaert SA is currently generating about -0.17 per unit of risk. If you would invest  15,972  in Carpenter Technology on September 24, 2024 and sell it today you would earn a total of  1,303  from holding Carpenter Technology or generate 8.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Carpenter Technology  vs.  NV Bekaert SA

Carpenter Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carpenter Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Carpenter Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NV Bekaert SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV Bekaert SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Carpenter Technology and NV Bekaert

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

The idea behind Carpenter Technology and NV Bekaert SA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.