Correlation Between Masco and Carrier Global

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

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

Diversification Opportunities for Masco and Carrier Global

0.45

Correlation Coefficient

Masco  Carrier Global

Very weak diversification

The 3 months correlation between Masco and Carrier is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Masco 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 Masco 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 Masco 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 Masco i.e., Masco and Carrier Global go up and down completely randomly.

Pair Corralation between Masco and Carrier Global

Considering the 90-day investment horizon Masco is expected to generate 0.84 times more return on investment than Carrier Global. However, Masco is 1.19 times less risky than Carrier Global. It trades about -0.07 of its potential returns per unit of risk. Carrier Global Corp is currently generating about -0.15 per unit of risk. If you would invest  8,017  in Masco on December 1, 2024 and sell it today you would lose (499.00) from holding Masco or give up 6.22% of portfolio value over 90 days.

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

Masco  vs.  Carrier Global Corp

Masco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Masco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Masco is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Carrier Global Corp

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Masco and Carrier Global

The main advantage of trading using opposite Masco and Carrier Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masco 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 Masco 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.