Correlation Between Owens Corning and Carrier Global

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

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

Diversification Opportunities for Owens Corning and Carrier Global

0.46

Correlation Coefficient

Owens Corning  Carrier Global

Very weak diversification

The 3 months correlation between Owens and Carrier is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Owens Corning 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 Owens Corning 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 Owens Corning 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 Owens Corning i.e., Owens Corning and Carrier Global go up and down completely randomly.

Pair Corralation between Owens Corning and Carrier Global

Allowing for the 90-day total investment horizon Owens Corning is expected to under-perform the Carrier Global. In addition to that, Owens Corning is 1.03 times more volatile than Carrier Global Corp. It trades about -0.11 of its total potential returns per unit of risk. Carrier Global Corp is currently generating about 0.02 per unit of volatility. If you would invest  6,647  in Carrier Global Corp on December 19, 2024 and sell it today you would earn a total of  83.00  from holding Carrier Global Corp or generate 1.25% return on investment over 90 days.

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

Owens Corning  vs.  Carrier Global Corp

Owens Corning

Risk-Adjusted Performance

Very Weak

Over the last 90 days Owens Corning 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 fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Carrier Global Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carrier Global Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Carrier Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Owens Corning and Carrier Global

The main advantage of trading using opposite Owens Corning and Carrier Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Owens Corning 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 Owens Corning 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.