Correlation Between Carpenter Technology and SMUCKER

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

By analyzing existing cross correlation between Carpenter Technology and SMUCKER J M, you can compare the effects of market volatilities on Carpenter Technology and SMUCKER 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 SMUCKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and SMUCKER.

Diversification Opportunities for Carpenter Technology and SMUCKER

-0.31

Correlation Coefficient

Carpenter Technology  SMUCKER

Very good diversification

The 3 months correlation between Carpenter and SMUCKER is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and SMUCKER J M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMUCKER J M 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 SMUCKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMUCKER J M has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and SMUCKER go up and down completely randomly.

Pair Corralation between Carpenter Technology and SMUCKER

Considering the 90-day investment horizon Carpenter Technology is expected to generate 1.01 times less return on investment than SMUCKER. In addition to that, Carpenter Technology is 2.84 times more volatile than SMUCKER J M. It trades about 0.1 of its total potential returns per unit of risk. SMUCKER J M is currently generating about 0.29 per unit of volatility. If you would invest  8,162  in SMUCKER J M on December 5, 2024 and sell it today you would earn a total of  328.00  from holding SMUCKER J M or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

Carpenter Technology  vs.  SMUCKER J M

Carpenter Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carpenter Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carpenter Technology is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SMUCKER J M

Risk-Adjusted Performance

Very Weak

Over the last 90 days SMUCKER J M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SMUCKER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carpenter Technology and SMUCKER

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

The idea behind Carpenter Technology and SMUCKER J M 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.