Correlation Between CARPENTER and TrueShares Technology

Can any of the company-specific risk be diversified away by investing in both CARPENTER and TrueShares Technology 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 TrueShares Technology 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 TrueShares Technology AI, you can compare the effects of market volatilities on CARPENTER and TrueShares Technology 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 TrueShares Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARPENTER and TrueShares Technology.

Diversification Opportunities for CARPENTER and TrueShares Technology

0.33

Correlation Coefficient

CARPENTER  TrueShares Technology

Weak diversification

The 3 months correlation between CARPENTER and TrueShares is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CARPENTER TECHNOLOGY P and TrueShares Technology AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueShares Technology 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 TrueShares Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueShares Technology has no effect on the direction of CARPENTER i.e., CARPENTER and TrueShares Technology go up and down completely randomly.

Pair Corralation between CARPENTER and TrueShares Technology

Assuming the 90 days trading horizon CARPENTER TECHNOLOGY P is expected to generate 0.19 times more return on investment than TrueShares Technology. However, CARPENTER TECHNOLOGY P is 5.15 times less risky than TrueShares Technology. It trades about -0.14 of its potential returns per unit of risk. TrueShares Technology AI is currently generating about -0.1 per unit of risk. If you would invest  10,073  in CARPENTER TECHNOLOGY P on October 11, 2024 and sell it today you would lose (93.00) from holding CARPENTER TECHNOLOGY P or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

CARPENTER TECHNOLOGY P  vs.  TrueShares Technology AI

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.

TrueShares Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TrueShares Technology AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TrueShares Technology 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 TrueShares Technology

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

The idea behind CARPENTER TECHNOLOGY P and TrueShares Technology AI 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.