Correlation Between Carlisle Companies and Perma Pipe

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

Diversification Opportunities for Carlisle Companies and Perma Pipe

0.74

Correlation Coefficient

Carlisle Companies  Perma Pipe

Poor diversification

The 3 months correlation between Carlisle and Perma is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Carlisle Companies Incorporate and Perma Pipe International Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Pipe Internati 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 Perma Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Pipe Internati has no effect on the direction of Carlisle Companies i.e., Carlisle Companies and Perma Pipe go up and down completely randomly.

Pair Corralation between Carlisle Companies and Perma Pipe

Considering the 90-day investment horizon Carlisle Companies Incorporated is expected to under-perform the Perma Pipe. But the stock apears to be less risky and, when comparing its historical volatility, Carlisle Companies Incorporated is 1.89 times less risky than Perma Pipe. The stock trades about -0.08 of its potential returns per unit of risk. The Perma Pipe International Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Perma Pipe International Holdings on December 21, 2024 and sell it today you would lose (44.00) from holding Perma Pipe International Holdings or give up 3.03% of portfolio value over 90 days.

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

Carlisle Companies Incorporate  vs.  Perma Pipe International Holdi

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 latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Perma Pipe Internati

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Pipe International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Perma Pipe is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Carlisle Companies and Perma Pipe

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

The idea behind Carlisle Companies Incorporated and Perma Pipe International Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.