Correlation Between Carpenter Technology and Unconstrained Emerging

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

By analyzing existing cross correlation between Carpenter Technology and Unconstrained Emerging Markets, you can compare the effects of market volatilities on Carpenter Technology and Unconstrained Emerging 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 Unconstrained Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Unconstrained Emerging.

Diversification Opportunities for Carpenter Technology and Unconstrained Emerging

0.0

Correlation Coefficient

Carpenter Technology  Unconstrained Emerging

Pay attention - limited upside

The 3 months correlation between Carpenter and Unconstrained is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Unconstrained Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unconstrained Emerging 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 Unconstrained Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unconstrained Emerging has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Unconstrained Emerging go up and down completely randomly.

Pair Corralation between Carpenter Technology and Unconstrained Emerging

If you would invest  8,040  in Carpenter Technology on February 24, 2024 and sell it today you would earn a total of  2,791  from holding Carpenter Technology or generate 34.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Carpenter Technology  vs.  Unconstrained Emerging Markets

Carpenter Technology

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carpenter Technology are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Carpenter Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Unconstrained Emerging

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Unconstrained Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Unconstrained Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carpenter Technology and Unconstrained Emerging

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

The idea behind Carpenter Technology and Unconstrained Emerging Markets 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.