Correlation Between Interface and Carrier Global

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

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

Diversification Opportunities for Interface and Carrier Global

-0.58

Correlation Coefficient

Interface  Carrier Global

Excellent diversification

The 3 months correlation between Interface and Carrier is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Interface 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 Interface 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 Interface 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 Interface i.e., Interface and Carrier Global go up and down completely randomly.

Pair Corralation between Interface and Carrier Global

Given the investment horizon of 90 days Interface is expected to generate 1.2 times more return on investment than Carrier Global. However, Interface is 1.2 times more volatile than Carrier Global Corp. It trades about -0.07 of its potential returns per unit of risk. Carrier Global Corp is currently generating about -0.32 per unit of risk. If you would invest  2,546  in Interface on September 21, 2024 and sell it today you would lose (81.00) from holding Interface or give up 3.18% of portfolio value over 90 days.

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

Interface  vs.  Carrier Global Corp

Interface

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Interface are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Interface exhibited solid returns over the last few months and may actually be approaching a breakup point.

Carrier Global Corp

Risk-Adjusted Performance

0 of 100

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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Interface and Carrier Global

The main advantage of trading using opposite Interface and Carrier Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interface 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 Interface 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.