Correlation Between Cutler Equity and Carillon Scout

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

By analyzing existing cross correlation between Cutler Equity and Carillon Scout Small, you can compare the effects of market volatilities on Cutler Equity and Carillon Scout 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 Cutler Equity with a short position of Carillon Scout. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cutler Equity and Carillon Scout.

Diversification Opportunities for Cutler Equity and Carillon Scout

0.78

Correlation Coefficient

Cutler Equity  Carillon Scout

Poor diversification

The 3 months correlation between Cutler and Carillon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cutler Equity and Carillon Scout Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Scout Small and Cutler Equity 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 Cutler Equity are associated (or correlated) with Carillon Scout. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Scout Small has no effect on the direction of Cutler Equity i.e., Cutler Equity and Carillon Scout go up and down completely randomly.

Pair Corralation between Cutler Equity and Carillon Scout

Assuming the 90 days horizon Cutler Equity is expected to generate 1.51 times less return on investment than Carillon Scout. But when comparing it to its historical volatility, Cutler Equity is 2.09 times less risky than Carillon Scout. It trades about 0.14 of its potential returns per unit of risk. Carillon Scout Small is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,460  in Carillon Scout Small on September 14, 2024 and sell it today you would earn a total of  987.00  from holding Carillon Scout Small or generate 40.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.63%
Values	Daily Returns

Cutler Equity  vs.  Carillon Scout Small

Cutler Equity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cutler Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Cutler Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carillon Scout Small

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Scout Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Carillon Scout may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cutler Equity and Carillon Scout

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

The idea behind Cutler Equity and Carillon Scout Small 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.