Correlation Between DP Cap and Carlyle

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

By analyzing existing cross correlation between DP Cap Acquisition and The Carlyle Group, you can compare the effects of market volatilities on DP Cap and Carlyle 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 DP Cap with a short position of Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of DP Cap and Carlyle.

Diversification Opportunities for DP Cap and Carlyle

-0.78

Correlation Coefficient

DP Cap  Carlyle

Pay attention - limited upside

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

Pair Corralation between DP Cap and Carlyle

Given the investment horizon of 90 days DP Cap is expected to generate 1.13 times less return on investment than Carlyle. But when comparing it to its historical volatility, DP Cap Acquisition is 1.92 times less risky than Carlyle. It trades about 0.06 of its potential returns per unit of risk. The Carlyle Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,470  in The Carlyle Group on September 24, 2024 and sell it today you would earn a total of  343.00  from holding The Carlyle Group or generate 23.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.58%
Values	Daily Returns

DP Cap Acquisition  vs.  The Carlyle Group

DP Cap Acquisition

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days DP Cap Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak fundamental indicators, DP Cap unveiled solid returns over the last few months and may actually be approaching a breakup point.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with DP Cap and Carlyle

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

The idea behind DP Cap Acquisition and The Carlyle Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.