Correlation Between Global X and CARPENTER

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

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

Diversification Opportunities for Global X and CARPENTER

0.37

Correlation Coefficient

Global X  CARPENTER

Weak diversification

The 3 months correlation between Global and CARPENTER is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER TECHNOLOGY and Global X 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 Global X MSCI are associated (or correlated) with CARPENTER. 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 Global X i.e., Global X and CARPENTER go up and down completely randomly.

Pair Corralation between Global X and CARPENTER

Given the investment horizon of 90 days Global X MSCI is expected to generate 2.04 times more return on investment than CARPENTER. However, Global X is 2.04 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.05 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about 0.01 per unit of risk. If you would invest  2,129  in Global X MSCI on September 12, 2024 and sell it today you would earn a total of  377.00  from holding Global X MSCI or generate 17.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.72%
Values	Daily Returns

Global X MSCI  vs.  CARPENTER TECHNOLOGY P

Global X MSCI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and CARPENTER

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

The idea behind Global X MSCI and CARPENTER TECHNOLOGY P 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..