Correlation Between TrueShares Technology and CARPENTER

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

By analyzing existing cross correlation between TrueShares Technology AI and CARPENTER TECHNOLOGY P, you can compare the effects of market volatilities on TrueShares Technology and CARPENTER 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 TrueShares Technology with a short position of CARPENTER. Check out your portfolio center. Please also check ongoing floating volatility patterns of TrueShares Technology and CARPENTER.

Diversification Opportunities for TrueShares Technology and CARPENTER

0.29

Correlation Coefficient

TrueShares Technology  CARPENTER

Modest diversification

The 3 months correlation between TrueShares and CARPENTER is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Technology AI and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER TECHNOLOGY and TrueShares Technology 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 TrueShares Technology AI are associated (or correlated) with CARPENTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARPENTER TECHNOLOGY has no effect on the direction of TrueShares Technology i.e., TrueShares Technology and CARPENTER go up and down completely randomly.

Pair Corralation between TrueShares Technology and CARPENTER

Given the investment horizon of 90 days TrueShares Technology AI is expected to generate 4.77 times more return on investment than CARPENTER. However, TrueShares Technology is 4.77 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.09 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about -0.02 per unit of risk. If you would invest  3,877  in TrueShares Technology AI on October 26, 2024 and sell it today you would earn a total of  348.00  from holding TrueShares Technology AI or generate 8.98% return on investment over 90 days.

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

TrueShares Technology AI  vs.  CARPENTER TECHNOLOGY P

TrueShares Technology

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TrueShares Technology AI are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, TrueShares Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TrueShares Technology and CARPENTER

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

The idea behind TrueShares Technology AI and CARPENTER TECHNOLOGY P 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.