Correlation Between Carlyle and Crescent Capital

Can any of the company-specific risk be diversified away by investing in both Carlyle and Crescent 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 Crescent 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 Crescent Capital BDC, you can compare the effects of market volatilities on Carlyle and Crescent 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 Crescent Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Crescent Capital.

Diversification Opportunities for Carlyle and Crescent Capital

0.8

Correlation Coefficient

Carlyle  Crescent Capital

Very poor diversification

The 3 months correlation between Carlyle and Crescent is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Crescent Capital BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Capital BDC 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 Crescent Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Capital BDC has no effect on the direction of Carlyle i.e., Carlyle and Crescent Capital go up and down completely randomly.

Pair Corralation between Carlyle and Crescent Capital

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 2.11 times more return on investment than Crescent Capital. However, Carlyle is 2.11 times more volatile than Crescent Capital BDC. It trades about -0.05 of its potential returns per unit of risk. Crescent Capital BDC is currently generating about -0.12 per unit of risk. If you would invest  5,018  in Carlyle Group on December 29, 2024 and sell it today you would lose (509.00) from holding Carlyle Group or give up 10.14% of portfolio value over 90 days.

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

Carlyle Group  vs.  Crescent Capital BDC

Carlyle Group

Risk-Adjusted Performance

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 abnormal 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.

Crescent Capital BDC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescent Capital BDC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Carlyle and Crescent Capital

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

The idea behind Carlyle Group and Crescent Capital BDC 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.