Correlation Between Montana Technologies and Carlisle Companies

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

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

Diversification Opportunities for Montana Technologies and Carlisle Companies

-0.63

Correlation Coefficient

Montana Technologies  Carlisle Companies

Excellent diversification

The 3 months correlation between Montana and Carlisle is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies and Carlisle Companies Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlisle Companies and Montana Technologies 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 Montana Technologies are associated (or correlated) with Carlisle Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlisle Companies has no effect on the direction of Montana Technologies i.e., Montana Technologies and Carlisle Companies go up and down completely randomly.

Pair Corralation between Montana Technologies and Carlisle Companies

Assuming the 90 days horizon Montana Technologies is expected to generate 5.26 times more return on investment than Carlisle Companies. However, Montana Technologies is 5.26 times more volatile than Carlisle Companies Incorporated. It trades about 0.43 of its potential returns per unit of risk. Carlisle Companies Incorporated is currently generating about -0.26 per unit of risk. If you would invest  65.00  in Montana Technologies on September 21, 2024 and sell it today you would earn a total of  84.00  from holding Montana Technologies or generate 129.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Montana Technologies  vs.  Carlisle Companies Incorporate

Montana Technologies

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Montana Technologies are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking indicators, Montana Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Carlisle Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlisle Companies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Montana Technologies and Carlisle Companies

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

The idea behind Montana Technologies and Carlisle Companies Incorporated 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.