Correlation Between REVO INSURANCE and Carpenter Technology

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

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

Diversification Opportunities for REVO INSURANCE and Carpenter Technology

0.72

Correlation Coefficient

REVO INSURANCE  Carpenter Technology

Poor diversification

The 3 months correlation between REVO and Carpenter is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology and REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and Carpenter Technology go up and down completely randomly.

Pair Corralation between REVO INSURANCE and Carpenter Technology

Assuming the 90 days horizon REVO INSURANCE SPA is expected to generate 0.78 times more return on investment than Carpenter Technology. However, REVO INSURANCE SPA is 1.28 times less risky than Carpenter Technology. It trades about 0.34 of its potential returns per unit of risk. Carpenter Technology is currently generating about -0.31 per unit of risk. If you would invest  1,045  in REVO INSURANCE SPA on September 26, 2024 and sell it today you would earn a total of  110.00  from holding REVO INSURANCE SPA or generate 10.53% return on investment over 90 days.

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

REVO INSURANCE SPA  vs.  Carpenter Technology

REVO INSURANCE SPA

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in REVO INSURANCE SPA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REVO INSURANCE reported solid returns over the last few months and may actually be approaching a breakup point.

Carpenter Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carpenter Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Carpenter Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REVO INSURANCE and Carpenter Technology

The main advantage of trading using opposite REVO INSURANCE and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.

The idea behind REVO INSURANCE SPA and Carpenter Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.