Correlation Between Carlyle and XAI Octagon

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

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

Diversification Opportunities for Carlyle and XAI Octagon

0.57

Correlation Coefficient

Carlyle  XAI Octagon

Very weak diversification

The 3 months correlation between Carlyle and XAI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating 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 XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of Carlyle i.e., Carlyle and XAI Octagon go up and down completely randomly.

Pair Corralation between Carlyle and XAI Octagon

Allowing for the 90-day total investment horizon Carlyle Group is expected to under-perform the XAI Octagon. In addition to that, Carlyle is 3.28 times more volatile than XAI Octagon Floating. It trades about -0.04 of its total potential returns per unit of risk. XAI Octagon Floating is currently generating about -0.13 per unit of volatility. If you would invest  641.00  in XAI Octagon Floating on December 27, 2024 and sell it today you would lose (41.00) from holding XAI Octagon Floating or give up 6.4% of portfolio value over 90 days.

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

Carlyle Group  vs.  XAI Octagon Floating

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.

XAI Octagon Floating

Risk-Adjusted Performance

Very Weak

Over the last 90 days XAI Octagon Floating has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential 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 XAI Octagon

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

The idea behind Carlyle Group and XAI Octagon Floating 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.