Correlation Between Carlyle and Associated Capital

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

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

Diversification Opportunities for Carlyle and Associated Capital

0.92

Correlation Coefficient

Carlyle  Associated Capital

Almost no diversification

The 3 months correlation between Carlyle and Associated is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital and Carlyle 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 Carlyle Group are associated (or correlated) with Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Carlyle i.e., Carlyle and Associated Capital go up and down completely randomly.

Pair Corralation between Carlyle and Associated Capital

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 1.16 times more return on investment than Associated Capital. However, Carlyle is 1.16 times more volatile than Associated Capital Group. It trades about 0.21 of its potential returns per unit of risk. Associated Capital Group is currently generating about 0.12 per unit of risk. If you would invest  3,985  in Carlyle Group on August 30, 2024 and sell it today you would earn a total of  1,285  from holding Carlyle Group or generate 32.25% return on investment over 90 days.

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

Carlyle Group  vs.  Associated Capital Group

Carlyle Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Associated Capital

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Associated Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlyle and Associated Capital

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

The idea behind Carlyle Group and Associated Capital 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.