Correlation Between Lixil Group and Carrier Global

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Can any of the company-specific risk be diversified away by investing in both Lixil Group and Carrier Global 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 Lixil Group and Carrier Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lixil Group Corp and Carrier Global Corp, you can compare the effects of market volatilities on Lixil Group and Carrier Global 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 Lixil Group with a short position of Carrier Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lixil Group and Carrier Global.

Diversification Opportunities for Lixil Group and Carrier Global

LixilCarrierDiversified AwayLixilCarrierDiversified Away100%
0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Lixil and Carrier is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lixil Group Corp and Carrier Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrier Global Corp and Lixil Group 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 Lixil Group Corp are associated (or correlated) with Carrier Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrier Global Corp has no effect on the direction of Lixil Group i.e., Lixil Group and Carrier Global go up and down completely randomly.

Pair Corralation between Lixil Group and Carrier Global

Assuming the 90 days horizon Lixil Group Corp is expected to generate 0.75 times more return on investment than Carrier Global. However, Lixil Group Corp is 1.34 times less risky than Carrier Global. It trades about -0.12 of its potential returns per unit of risk. Carrier Global Corp is currently generating about -0.12 per unit of risk. If you would invest  2,442  in Lixil Group Corp on September 28, 2024 and sell it today you would lose (256.00) from holding Lixil Group Corp or give up 10.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Lixil Group Corp  vs.  Carrier Global Corp

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -15-10-50
JavaScript chart by amCharts 3.21.15JSGRY CARR
       Timeline  
Lixil Group Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Lixil Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15NovDecDec2121.52222.52323.524
Carrier Global Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Carrier Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15NovDecDec6870727476788082

Lixil Group and Carrier Global Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.26-1.74-1.22-0.7-0.180.280.81.321.842.36 0.100.150.20
JavaScript chart by amCharts 3.21.15JSGRY CARR
       Returns  

Pair Trading with Lixil Group and Carrier Global

The main advantage of trading using opposite Lixil Group and Carrier Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lixil Group position performs unexpectedly, Carrier Global 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 Carrier Global will offset losses from the drop in Carrier Global's long position.
The idea behind Lixil Group Corp and Carrier Global Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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