Correlation Between Falcon Metals and Carlton Investments

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

By analyzing existing cross correlation between Falcon Metals and Carlton Investments, you can compare the effects of market volatilities on Falcon Metals and Carlton Investments 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 Falcon Metals with a short position of Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Carlton Investments.

Diversification Opportunities for Falcon Metals and Carlton Investments

-0.78

Correlation Coefficient

Falcon Metals  Carlton Investments

Pay attention - limited upside

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

Pair Corralation between Falcon Metals and Carlton Investments

Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the Carlton Investments. In addition to that, Falcon Metals is 5.95 times more volatile than Carlton Investments. It trades about -0.16 of its total potential returns per unit of risk. Carlton Investments is currently generating about 0.09 per unit of volatility. If you would invest  2,970  in Carlton Investments on September 13, 2024 and sell it today you would earn a total of  130.00  from holding Carlton Investments or generate 4.38% return on investment over 90 days.

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

Falcon Metals  vs.  Carlton Investments

Falcon Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Carlton Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Falcon Metals and Carlton Investments

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

The idea behind Falcon Metals and Carlton Investments 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .