Correlation Between Carlisle Companies and AAON

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

By analyzing existing cross correlation between Carlisle Companies Incorporated and AAON Inc, you can compare the effects of market volatilities on Carlisle Companies and AAON 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 Carlisle Companies with a short position of AAON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlisle Companies and AAON.

Diversification Opportunities for Carlisle Companies and AAON

-0.13

Correlation Coefficient

Carlisle Companies  AAON

Good diversification

The 3 months correlation between Carlisle and AAON is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Carlisle Companies Incorporate and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and Carlisle Companies 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 Carlisle Companies Incorporated are associated (or correlated) with AAON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAON Inc has no effect on the direction of Carlisle Companies i.e., Carlisle Companies and AAON go up and down completely randomly.

Pair Corralation between Carlisle Companies and AAON

Considering the 90-day investment horizon Carlisle Companies Incorporated is expected to under-perform the AAON. But the stock apears to be less risky and, when comparing its historical volatility, Carlisle Companies Incorporated is 1.53 times less risky than AAON. The stock trades about -0.04 of its potential returns per unit of risk. The AAON Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  9,286  in AAON Inc on September 21, 2024 and sell it today you would earn a total of  3,127  from holding AAON Inc or generate 33.67% return on investment over 90 days.

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

Carlisle Companies Incorporate  vs.  AAON Inc

Carlisle Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlisle Companies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

AAON Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AAON Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AAON displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlisle Companies and AAON

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

The idea behind Carlisle Companies Incorporated and AAON Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.