Correlation Between Carpenter Technology and Precision Castparts
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology and Precision Castparts 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 Precision Castparts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carpenter Technology and Precision Castparts Corp, you can compare the effects of market volatilities on Carpenter Technology and Precision Castparts 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 Precision Castparts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Precision Castparts.
Diversification Opportunities for Carpenter Technology and Precision Castparts
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Carpenter and Precision is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Precision Castparts Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Castparts Corp 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 Precision Castparts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Castparts Corp has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Precision Castparts go up and down completely randomly.
Pair Corralation between Carpenter Technology and Precision Castparts
If you would invest 7,001 in Carpenter Technology on January 27, 2024 and sell it today you would earn a total of 1,399 from holding Carpenter Technology or generate 19.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Carpenter Technology vs. Precision Castparts Corp
Performance |
| Timeline |
| Carpenter Technology |
| Precision Castparts Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Carpenter Technology and Precision Castparts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carpenter Technology and Precision Castparts
The main advantage of trading using opposite Carpenter Technology and Precision Castparts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology position performs unexpectedly, Precision Castparts 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 Precision Castparts will offset losses from the drop in Precision Castparts' long position.| Carpenter Technology vs. ESAB Corp | Carpenter Technology vs. Insteel Industries | Carpenter Technology vs. Northwest Pipe | Carpenter Technology vs. Gulf Island Fabrication |
| Precision Castparts vs. Live Ventures | Precision Castparts vs. Suburban Propane Partners | Precision Castparts vs. Kinetik Holdings | Precision Castparts vs. Nextera Energy |
Check out your portfolio center.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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