Correlation Between Armada Hflr and CARRIER

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

By analyzing existing cross correlation between Armada Hflr Pr and CARRIER GLOBAL P, you can compare the effects of market volatilities on Armada Hflr and CARRIER 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 Armada Hflr with a short position of CARRIER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and CARRIER.

Diversification Opportunities for Armada Hflr and CARRIER

0.15

Correlation Coefficient

Armada Hflr  CARRIER

Average diversification

The 3 months correlation between Armada and CARRIER is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and CARRIER GLOBAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARRIER GLOBAL P and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with CARRIER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARRIER GLOBAL P has no effect on the direction of Armada Hflr i.e., Armada Hflr and CARRIER go up and down completely randomly.

Pair Corralation between Armada Hflr and CARRIER

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.57 times more return on investment than CARRIER. However, Armada Hflr Pr is 1.74 times less risky than CARRIER. It trades about -0.09 of its potential returns per unit of risk. CARRIER GLOBAL P is currently generating about -0.09 per unit of risk. If you would invest  1,107  in Armada Hflr Pr on September 17, 2024 and sell it today you would lose (15.00) from holding Armada Hflr Pr or give up 1.36% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  CARRIER GLOBAL P

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

CARRIER GLOBAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARRIER GLOBAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARRIER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and CARRIER

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

The idea behind Armada Hflr Pr and CARRIER GLOBAL P 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.