Correlation Between Carlisle Companies and Birkenstock Holding

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

By analyzing existing cross correlation between Carlisle Companies Incorporated and Birkenstock Holding plc, you can compare the effects of market volatilities on Carlisle Companies and Birkenstock Holding 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 Carlisle Companies with a short position of Birkenstock Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlisle Companies and Birkenstock Holding.

Diversification Opportunities for Carlisle Companies and Birkenstock Holding

-0.28

Correlation Coefficient

Carlisle Companies  Birkenstock Holding

Very good diversification

The 3 months correlation between Carlisle and Birkenstock is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Carlisle Companies Incorporate and Birkenstock Holding plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birkenstock Holding plc and Carlisle Companies 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 Carlisle Companies Incorporated are associated (or correlated) with Birkenstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birkenstock Holding plc has no effect on the direction of Carlisle Companies i.e., Carlisle Companies and Birkenstock Holding go up and down completely randomly.

Pair Corralation between Carlisle Companies and Birkenstock Holding

Considering the 90-day investment horizon Carlisle Companies Incorporated is expected to generate 0.68 times more return on investment than Birkenstock Holding. However, Carlisle Companies Incorporated is 1.48 times less risky than Birkenstock Holding. It trades about 0.22 of its potential returns per unit of risk. Birkenstock Holding plc is currently generating about -0.02 per unit of risk. If you would invest  34,928  in Carlisle Companies Incorporated on February 29, 2024 and sell it today you would earn a total of  7,214  from holding Carlisle Companies Incorporated or generate 20.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Carlisle Companies Incorporate  vs.  Birkenstock Holding plc

Carlisle Companies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlisle Companies Incorporated are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Carlisle Companies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Birkenstock Holding plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birkenstock Holding plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Birkenstock Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Carlisle Companies and Birkenstock Holding

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

The idea behind Carlisle Companies Incorporated and Birkenstock Holding plc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.