Correlation Between Newbury Street and Carlyle

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

By analyzing existing cross correlation between Newbury Street Acquisition and Carlyle Group, you can compare the effects of market volatilities on Newbury Street 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 Newbury Street with a short position of Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newbury Street and Carlyle.

Diversification Opportunities for Newbury Street and Carlyle

-0.56

Correlation Coefficient

Newbury Street  Carlyle

Excellent diversification

The 3 months correlation between Newbury and Carlyle is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Newbury Street Acquisition and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and Newbury Street 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 Newbury Street Acquisition 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 Newbury Street i.e., Newbury Street and Carlyle go up and down completely randomly.

Pair Corralation between Newbury Street and Carlyle

Assuming the 90 days horizon Newbury Street Acquisition is expected to generate 10.35 times more return on investment than Carlyle. However, Newbury Street is 10.35 times more volatile than Carlyle Group. It trades about 0.16 of its potential returns per unit of risk. Carlyle Group is currently generating about -0.07 per unit of risk. If you would invest  4.00  in Newbury Street Acquisition on March 7, 2024 and sell it today you would earn a total of  3.50  from holding Newbury Street Acquisition or generate 87.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	69.84%
Values	Daily Returns

Newbury Street Acquisition  vs.  Carlyle Group

Newbury Street Acqui

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newbury Street Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Newbury Street showed solid returns over the last few months and may actually be approaching a breakup point.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Newbury Street and Carlyle

The main advantage of trading using opposite Newbury Street and Carlyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newbury Street 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.

The idea behind Newbury Street Acquisition and Carlyle Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.