Correlation Between Carlyle and Netcapital

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

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

Diversification Opportunities for Carlyle and Netcapital

0.32

Correlation Coefficient

Carlyle  Netcapital

Weak diversification

The 3 months correlation between Carlyle and Netcapital is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital 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 Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of Carlyle i.e., Carlyle and Netcapital go up and down completely randomly.

Pair Corralation between Carlyle and Netcapital

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.68 times more return on investment than Netcapital. However, Carlyle Group is 1.47 times less risky than Netcapital. It trades about -0.08 of its potential returns per unit of risk. Netcapital is currently generating about -0.07 per unit of risk. If you would invest  5,018  in Carlyle Group on December 30, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Carlyle Group  vs.  Netcapital

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 unfluctuating 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.

Netcapital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netcapital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Carlyle and Netcapital

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

The idea behind Carlyle Group and Netcapital 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.