Correlation Between US Gold and CARPENTER

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

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

Diversification Opportunities for US Gold and CARPENTER

-0.07

Correlation Coefficient

US Gold  CARPENTER

Good diversification

The 3 months correlation between USAU and CARPENTER is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding US Gold Corp and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER TECHNOLOGY and US Gold 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 US Gold Corp 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 US Gold i.e., US Gold and CARPENTER go up and down completely randomly.

Pair Corralation between US Gold and CARPENTER

Given the investment horizon of 90 days US Gold Corp is expected to generate 7.87 times more return on investment than CARPENTER. However, US Gold is 7.87 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.07 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about 0.02 per unit of risk. If you would invest  371.00  in US Gold Corp on September 12, 2024 and sell it today you would earn a total of  350.00  from holding US Gold Corp or generate 94.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

US Gold Corp  vs.  CARPENTER TECHNOLOGY P

US Gold Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Gold Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 US Gold and CARPENTER

The main advantage of trading using opposite US Gold and CARPENTER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Gold 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 US Gold Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.