Correlation Between Carrier Global and Gibraltar Industries

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

By analyzing existing cross correlation between Carrier Global Corp and Gibraltar Industries, you can compare the effects of market volatilities on Carrier Global and Gibraltar Industries 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 Carrier Global with a short position of Gibraltar Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrier Global and Gibraltar Industries.

Diversification Opportunities for Carrier Global and Gibraltar Industries

0.08

Correlation Coefficient

Carrier Global  Gibraltar Industries

Significant diversification

The 3 months correlation between Carrier and Gibraltar is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and Gibraltar Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gibraltar Industries and Carrier Global 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 Carrier Global Corp are associated (or correlated) with Gibraltar Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gibraltar Industries has no effect on the direction of Carrier Global i.e., Carrier Global and Gibraltar Industries go up and down completely randomly.

Pair Corralation between Carrier Global and Gibraltar Industries

Given the investment horizon of 90 days Carrier Global Corp is expected to under-perform the Gibraltar Industries. But the stock apears to be less risky and, when comparing its historical volatility, Carrier Global Corp is 1.33 times less risky than Gibraltar Industries. The stock trades about -0.03 of its potential returns per unit of risk. The Gibraltar Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,027  in Gibraltar Industries on December 22, 2024 and sell it today you would earn a total of  62.00  from holding Gibraltar Industries or generate 1.03% return on investment over 90 days.

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

Carrier Global Corp  vs.  Gibraltar Industries

Carrier Global Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrier Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Carrier Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Gibraltar Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gibraltar Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Gibraltar Industries is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Carrier Global and Gibraltar Industries

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

The idea behind Carrier Global Corp and Gibraltar Industries 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.