Correlation Between Carpenter Technology and Ipsos SA

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

By analyzing existing cross correlation between Carpenter Technology and Ipsos SA, you can compare the effects of market volatilities on Carpenter Technology and Ipsos SA 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 Carpenter Technology with a short position of Ipsos SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Ipsos SA.

Diversification Opportunities for Carpenter Technology and Ipsos SA

-0.41

Correlation Coefficient

Carpenter Technology  Ipsos SA

Very good diversification

The 3 months correlation between Carpenter and Ipsos is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Ipsos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsos SA and Carpenter Technology 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 Carpenter Technology are associated (or correlated) with Ipsos SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsos SA has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Ipsos SA go up and down completely randomly.

Pair Corralation between Carpenter Technology and Ipsos SA

Considering the 90-day investment horizon Carpenter Technology is expected to generate 0.95 times more return on investment than Ipsos SA. However, Carpenter Technology is 1.06 times less risky than Ipsos SA. It trades about 0.17 of its potential returns per unit of risk. Ipsos SA is currently generating about -0.14 per unit of risk. If you would invest  15,839  in Carpenter Technology on October 21, 2024 and sell it today you would earn a total of  4,819  from holding Carpenter Technology or generate 30.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Carpenter Technology  vs.  Ipsos SA

Carpenter Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carpenter Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Carpenter Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ipsos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ipsos SA 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 basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Carpenter Technology and Ipsos SA

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

The idea behind Carpenter Technology and Ipsos SA 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.