Correlation Between Carlisle Companies and Gibraltar Industries

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

Diversification Opportunities for Carlisle Companies and Gibraltar Industries

0.48

Correlation Coefficient

Carlisle Companies  Gibraltar Industries

Very weak diversification

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

Pair Corralation between Carlisle Companies and Gibraltar Industries

Considering the 90-day investment horizon Carlisle Companies Incorporated is expected to generate 1.09 times more return on investment than Gibraltar Industries. However, Carlisle Companies is 1.09 times more volatile than Gibraltar Industries. It trades about -0.26 of its potential returns per unit of risk. Gibraltar Industries is currently generating about -0.31 per unit of risk. If you would invest  43,173  in Carlisle Companies Incorporated on September 21, 2024 and sell it today you would lose (4,772) from holding Carlisle Companies Incorporated or give up 11.05% 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.  Gibraltar Industries

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.

Gibraltar Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gibraltar Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental 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.

Pair Trading with Carlisle Companies and Gibraltar Industries

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

The idea behind Carlisle Companies Incorporated and Gibraltar Industries 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.