Correlation Between Carlyle and Cohen

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

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

Diversification Opportunities for Carlyle and Cohen

0.64

Correlation Coefficient

Carlyle  Cohen

Poor diversification

The 3 months correlation between Carlyle and Cohen is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Cohen Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Company 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 Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Company has no effect on the direction of Carlyle i.e., Carlyle and Cohen go up and down completely randomly.

Pair Corralation between Carlyle and Cohen

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.6 times more return on investment than Cohen. However, Carlyle Group is 1.66 times less risky than Cohen. It trades about 0.08 of its potential returns per unit of risk. Cohen Company is currently generating about 0.04 per unit of risk. If you would invest  4,274  in Carlyle Group on September 13, 2024 and sell it today you would earn a total of  1,033  from holding Carlyle Group or generate 24.17% return on investment over 90 days.

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

Carlyle Group  vs.  Cohen Company

Carlyle Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Cohen Company

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Company are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical indicators, Cohen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlyle and Cohen

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

The idea behind Carlyle Group and Cohen Company 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..