Correlation Between Carlisle Companies and Geberit AG

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

Diversification Opportunities for Carlisle Companies and Geberit AG

0.06

Correlation Coefficient

Carlisle Companies  Geberit AG

Significant diversification

The 3 months correlation between Carlisle and Geberit is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Carlisle Companies Incorporate and Geberit AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG ADR 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 Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG ADR has no effect on the direction of Carlisle Companies i.e., Carlisle Companies and Geberit AG go up and down completely randomly.

Pair Corralation between Carlisle Companies and Geberit AG

Considering the 90-day investment horizon Carlisle Companies Incorporated is expected to generate 1.44 times more return on investment than Geberit AG. However, Carlisle Companies is 1.44 times more volatile than Geberit AG ADR. It trades about -0.04 of its potential returns per unit of risk. Geberit AG ADR is currently generating about -0.06 per unit of risk. If you would invest  40,995  in Carlisle Companies Incorporated on September 21, 2024 and sell it today you would lose (3,168) from holding Carlisle Companies Incorporated or give up 7.73% of portfolio value over 90 days.

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

Carlisle Companies Incorporate  vs.  Geberit AG ADR

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.

Geberit AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geberit AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Carlisle Companies and Geberit AG

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

The idea behind Carlisle Companies Incorporated and Geberit AG ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.