Correlation Between United States and Carlyle
Can any of the company-specific risk be diversified away by investing in both United States and Carlyle 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 United States and Carlyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Gasoline and Carlyle Group, you can compare the effects of market volatilities on United States and Carlyle 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 United States with a short position of Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Carlyle.
Diversification Opportunities for United States and Carlyle
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Carlyle is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding United States Gasoline and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and United States 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 United States Gasoline are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of United States i.e., United States and Carlyle go up and down completely randomly.
Pair Corralation between United States and Carlyle
Considering the 90-day investment horizon United States is expected to generate 1.95 times less return on investment than Carlyle. But when comparing it to its historical volatility, United States Gasoline is 1.09 times less risky than Carlyle. It trades about 0.02 of its potential returns per unit of risk. Carlyle Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,541 in Carlyle Group on January 25, 2024 and sell it today you would earn a total of 1,092 from holding Carlyle Group or generate 30.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
United States Gasoline vs. Carlyle Group
Performance |
Timeline |
United States Gasoline |
Carlyle Group |
United States and Carlyle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United States and Carlyle
The main advantage of trading using opposite United States and Carlyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Carlyle 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 Carlyle will offset losses from the drop in Carlyle's long position.United States vs. United States 12 | United States vs. Invesco DB Energy | United States vs. United States Brent | United States vs. Invesco DB Oil |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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