Correlation Between Carlyle and Finance Of

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

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

Diversification Opportunities for Carlyle and Finance Of

0.63

Correlation Coefficient

Carlyle  Finance Of

Poor diversification

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

Pair Corralation between Carlyle and Finance Of

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.7 times more return on investment than Finance Of. However, Carlyle Group is 1.43 times less risky than Finance Of. It trades about -0.08 of its potential returns per unit of risk. Finance of America is currently generating about -0.11 per unit of risk. If you would invest  5,018  in Carlyle Group on December 28, 2024 and sell it today you would lose (703.00) from holding Carlyle Group or give up 14.01% of portfolio value over 90 days.

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

Carlyle Group  vs.  Finance of America

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 abnormal performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Finance of America

Risk-Adjusted Performance

Very Weak

Over the last 90 days Finance of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Carlyle and Finance Of

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

The idea behind Carlyle Group and Finance of America 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.