Correlation Between CARPENTER and Invesco Disciplined

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

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

Diversification Opportunities for CARPENTER and Invesco Disciplined

0.44

Correlation Coefficient

CARPENTER  Invesco Disciplined

Very weak diversification

The 3 months correlation between CARPENTER and Invesco is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CARPENTER TECHNOLOGY P and Invesco Disciplined Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Disciplined and CARPENTER 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 CARPENTER TECHNOLOGY P are associated (or correlated) with Invesco Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Disciplined has no effect on the direction of CARPENTER i.e., CARPENTER and Invesco Disciplined go up and down completely randomly.

Pair Corralation between CARPENTER and Invesco Disciplined

Assuming the 90 days trading horizon CARPENTER TECHNOLOGY P is expected to generate 0.44 times more return on investment than Invesco Disciplined. However, CARPENTER TECHNOLOGY P is 2.28 times less risky than Invesco Disciplined. It trades about 0.01 of its potential returns per unit of risk. Invesco Disciplined Equity is currently generating about -0.01 per unit of risk. If you would invest  9,960  in CARPENTER TECHNOLOGY P on October 24, 2024 and sell it today you would earn a total of  20.00  from holding CARPENTER TECHNOLOGY P or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.77%
Values	Daily Returns

CARPENTER TECHNOLOGY P  vs.  Invesco Disciplined Equity

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.

Invesco Disciplined

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Disciplined Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Invesco Disciplined is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CARPENTER and Invesco Disciplined

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

The idea behind CARPENTER TECHNOLOGY P and Invesco Disciplined Equity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.