Correlation Between Carlton Investments and Bell Financial

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

By analyzing existing cross correlation between Carlton Investments and Bell Financial Group, you can compare the effects of market volatilities on Carlton Investments and Bell Financial 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 Carlton Investments with a short position of Bell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlton Investments and Bell Financial.

Diversification Opportunities for Carlton Investments and Bell Financial

0.28

Correlation Coefficient

Carlton Investments  Bell Financial

Modest diversification

The 3 months correlation between Carlton and Bell is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and Bell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Financial Group and Carlton Investments 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 Carlton Investments are associated (or correlated) with Bell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Financial Group has no effect on the direction of Carlton Investments i.e., Carlton Investments and Bell Financial go up and down completely randomly.

Pair Corralation between Carlton Investments and Bell Financial

Assuming the 90 days trading horizon Carlton Investments is expected to generate 7.8 times less return on investment than Bell Financial. But when comparing it to its historical volatility, Carlton Investments is 2.21 times less risky than Bell Financial. It trades about 0.02 of its potential returns per unit of risk. Bell Financial Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Bell Financial Group on October 25, 2024 and sell it today you would earn a total of  48.00  from holding Bell Financial Group or generate 52.75% return on investment over 90 days.

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

Carlton Investments  vs.  Bell Financial Group

Carlton Investments

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bell Financial Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bell Financial Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Bell Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Carlton Investments and Bell Financial

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

The idea behind Carlton Investments and Bell Financial Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.