Correlation Between Carlisle Companies and Carrier Global

Can any of the company-specific risk be diversified away by investing in both Carlisle Companies and Carrier Global 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 Carrier Global 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 Carrier Global Corp, you can compare the effects of market volatilities on Carlisle Companies and Carrier Global 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 Carrier Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlisle Companies and Carrier Global.

Diversification Opportunities for Carlisle Companies and Carrier Global

0.48

Correlation Coefficient

Carlisle Companies  Carrier Global

Very weak diversification

The 3 months correlation between Carlisle and Carrier is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Carlisle Companies Incorporate and Carrier Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrier Global Corp 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 Carrier Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrier Global Corp has no effect on the direction of Carlisle Companies i.e., Carlisle Companies and Carrier Global go up and down completely randomly.

Pair Corralation between Carlisle Companies and Carrier Global

Considering the 90-day investment horizon Carlisle Companies Incorporated is expected to generate 1.01 times more return on investment than Carrier Global. However, Carlisle Companies is 1.01 times more volatile than Carrier Global Corp. It trades about -0.03 of its potential returns per unit of risk. Carrier Global Corp is currently generating about -0.06 per unit of risk. If you would invest  36,764  in Carlisle Companies Incorporated on December 29, 2024 and sell it today you would lose (1,813) from holding Carlisle Companies Incorporated or give up 4.93% of portfolio value over 90 days.

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

Carlisle Companies Incorporate  vs.  Carrier Global Corp

Carlisle Companies

Risk-Adjusted Performance

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 quite persistent basic indicators, Carlisle Companies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Carrier Global Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrier Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Carlisle Companies and Carrier Global

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

The idea behind Carlisle Companies Incorporated and Carrier Global Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.