Correlation Between NIBE Industrier and Carlisle Companies

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

By analyzing existing cross correlation between NIBE Industrier AB and Carlisle Companies Incorporated, you can compare the effects of market volatilities on NIBE Industrier and Carlisle Companies 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 NIBE Industrier with a short position of Carlisle Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIBE Industrier and Carlisle Companies.

Diversification Opportunities for NIBE Industrier and Carlisle Companies

0.62

Correlation Coefficient

NIBE Industrier  Carlisle Companies

Poor diversification

The 3 months correlation between NIBE and Carlisle is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NIBE Industrier AB and Carlisle Companies Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlisle Companies and NIBE Industrier 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 NIBE Industrier AB are associated (or correlated) with Carlisle Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlisle Companies has no effect on the direction of NIBE Industrier i.e., NIBE Industrier and Carlisle Companies go up and down completely randomly.

Pair Corralation between NIBE Industrier and Carlisle Companies

Assuming the 90 days horizon NIBE Industrier AB is expected to under-perform the Carlisle Companies. In addition to that, NIBE Industrier is 1.94 times more volatile than Carlisle Companies Incorporated. It trades about -0.04 of its total potential returns per unit of risk. Carlisle Companies Incorporated is currently generating about 0.05 per unit of volatility. If you would invest  25,150  in Carlisle Companies Incorporated on October 6, 2024 and sell it today you would earn a total of  11,485  from holding Carlisle Companies Incorporated or generate 45.67% return on investment over 90 days.

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

NIBE Industrier AB  vs.  Carlisle Companies Incorporate

NIBE Industrier AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIBE Industrier AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Carlisle Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlisle Companies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with NIBE Industrier and Carlisle Companies

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

The idea behind NIBE Industrier AB and Carlisle Companies Incorporated 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.