Correlation Between Carpenter Technology and Gibraltar Industries
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology and Gibraltar Industries 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 Technology and Gibraltar Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carpenter Technology and Gibraltar Industries, you can compare the effects of market volatilities on Carpenter Technology and Gibraltar Industries 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 Technology with a short position of Gibraltar Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and Gibraltar Industries.
Diversification Opportunities for Carpenter Technology and Gibraltar Industries
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carpenter and Gibraltar is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and Gibraltar Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gibraltar Industries and Carpenter Technology 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 are associated (or correlated) with Gibraltar Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gibraltar Industries has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and Gibraltar Industries go up and down completely randomly.
Pair Corralation between Carpenter Technology and Gibraltar Industries
Considering the 90-day investment horizon Carpenter Technology is expected to generate 2.18 times more return on investment than Gibraltar Industries. However, Carpenter Technology is 2.18 times more volatile than Gibraltar Industries. It trades about 0.41 of its potential returns per unit of risk. Gibraltar Industries is currently generating about 0.01 per unit of risk. If you would invest 8,373 in Carpenter Technology on February 29, 2024 and sell it today you would earn a total of 2,863 from holding Carpenter Technology or generate 34.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Carpenter Technology vs. Gibraltar Industries
Performance |
Timeline |
Carpenter Technology |
Gibraltar Industries |
Carpenter Technology and Gibraltar Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carpenter Technology and Gibraltar Industries
The main advantage of trading using opposite Carpenter Technology and Gibraltar Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology position performs unexpectedly, Gibraltar Industries 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 Gibraltar Industries will offset losses from the drop in Gibraltar Industries' long position.Carpenter Technology vs. Haynes International | Carpenter Technology vs. Worthington Industries | Carpenter Technology vs. Ryerson Holding Corp | Carpenter Technology vs. Mueller Industries |
Gibraltar Industries vs. Griffon | Gibraltar Industries vs. Aquagold International | Gibraltar Industries vs. Thrivent High Yield | Gibraltar Industries vs. Morningstar Unconstrained Allocation |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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