Correlation Between Carlyle and Royce Value

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

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

Diversification Opportunities for Carlyle and Royce Value

0.84

Correlation Coefficient

Carlyle  Royce Value

Very poor diversification

The 3 months correlation between Carlyle and Royce is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Royce Value Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Value Closed 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 Royce Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Value Closed has no effect on the direction of Carlyle i.e., Carlyle and Royce Value go up and down completely randomly.

Pair Corralation between Carlyle and Royce Value

Allowing for the 90-day total investment horizon Carlyle Group is expected to under-perform the Royce Value. In addition to that, Carlyle is 2.64 times more volatile than Royce Value Closed. It trades about -0.08 of its total potential returns per unit of risk. Royce Value Closed is currently generating about -0.12 per unit of volatility. If you would invest  1,539  in Royce Value Closed on December 28, 2024 and sell it today you would lose (114.00) from holding Royce Value Closed or give up 7.41% 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.  Royce Value Closed

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.

Royce Value Closed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Value Closed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Carlyle and Royce Value

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

The idea behind Carlyle Group and Royce Value Closed 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.