Correlation Between 00108WAF7 and CARRIER

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and CARRIER 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 00108WAF7 and CARRIER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and CARRIER GLOBAL P, you can compare the effects of market volatilities on 00108WAF7 and CARRIER 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 00108WAF7 with a short position of CARRIER. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and CARRIER.

Diversification Opportunities for 00108WAF7 and CARRIER

-0.04

Correlation Coefficient

00108WAF7  CARRIER

Good diversification

The 3 months correlation between 00108WAF7 and CARRIER is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and CARRIER GLOBAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARRIER GLOBAL P and 00108WAF7 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 AEP TEX INC are associated (or correlated) with CARRIER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARRIER GLOBAL P has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and CARRIER go up and down completely randomly.

Pair Corralation between 00108WAF7 and CARRIER

Assuming the 90 days trading horizon AEP TEX INC is expected to generate 218.89 times more return on investment than CARRIER. However, 00108WAF7 is 218.89 times more volatile than CARRIER GLOBAL P. It trades about 0.13 of its potential returns per unit of risk. CARRIER GLOBAL P is currently generating about -0.16 per unit of risk. If you would invest  7,797  in AEP TEX INC on September 24, 2024 and sell it today you would lose (129.00) from holding AEP TEX INC or give up 1.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.42%
Values	Daily Returns

AEP TEX INC  vs.  CARRIER GLOBAL P

AEP TEX INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 00108WAF7 sustained solid returns over the last few months and may actually be approaching a breakup point.

CARRIER GLOBAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARRIER GLOBAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CARRIER GLOBAL P investors.

Pair Trading with 00108WAF7 and CARRIER

The main advantage of trading using opposite 00108WAF7 and CARRIER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, CARRIER 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 CARRIER will offset losses from the drop in CARRIER's long position.

The idea behind AEP TEX INC and CARRIER GLOBAL 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.