Correlation Between Carrier GlobalCorp and Toto

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

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

Diversification Opportunities for Carrier GlobalCorp and Toto

0.54

Correlation Coefficient

Carrier GlobalCorp  Toto

Very weak diversification

The 3 months correlation between Carrier and Toto is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Carrier GlobalCorp and Toto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toto and Carrier GlobalCorp 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 Carrier GlobalCorp are associated (or correlated) with Toto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toto has no effect on the direction of Carrier GlobalCorp i.e., Carrier GlobalCorp and Toto go up and down completely randomly.

Pair Corralation between Carrier GlobalCorp and Toto

Given the investment horizon of 90 days Carrier GlobalCorp is expected to generate 1.55 times more return on investment than Toto. However, Carrier GlobalCorp is 1.55 times more volatile than Toto. It trades about 0.16 of its potential returns per unit of risk. Toto is currently generating about -0.05 per unit of risk. If you would invest  5,740  in Carrier GlobalCorp on January 30, 2024 and sell it today you would earn a total of  492.00  from holding Carrier GlobalCorp or generate 8.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Carrier GlobalCorp  vs.  Toto

Carrier GlobalCorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carrier GlobalCorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Carrier GlobalCorp may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Toto

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Toto are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Toto is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carrier GlobalCorp and Toto

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

The idea behind Carrier GlobalCorp and Toto 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 CEOs Directory module to screen CEOs from public companies around the world.