Correlation Between Carlyle and Globe Life

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

By analyzing existing cross correlation between The Carlyle Group and Globe Life 425, you can compare the effects of market volatilities on Carlyle and Globe Life 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 Globe Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Globe Life.

Diversification Opportunities for Carlyle and Globe Life

0.77

Correlation Coefficient

Carlyle  Globe Life

Poor diversification

The 3 months correlation between Carlyle and Globe is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Carlyle Group and Globe Life 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Life 425 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 The Carlyle Group are associated (or correlated) with Globe Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Life 425 has no effect on the direction of Carlyle i.e., Carlyle and Globe Life go up and down completely randomly.

Pair Corralation between Carlyle and Globe Life

Assuming the 90 days horizon The Carlyle Group is expected to generate 0.58 times more return on investment than Globe Life. However, The Carlyle Group is 1.71 times less risky than Globe Life. It trades about 0.06 of its potential returns per unit of risk. Globe Life 425 is currently generating about 0.02 per unit of risk. If you would invest  1,486  in The Carlyle Group on September 24, 2024 and sell it today you would earn a total of  327.00  from holding The Carlyle Group or generate 22.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.66%
Values	Daily Returns

The Carlyle Group  vs.  Globe Life 425

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Globe Life 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Life 425 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Preferred Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Carlyle and Globe Life

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

The idea behind The Carlyle Group and Globe Life 425 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..