Correlation Between Middlefield Banc and Carlyle

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

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

Diversification Opportunities for Middlefield Banc and Carlyle

-0.74

Correlation Coefficient

Middlefield Banc  Carlyle

Pay attention - limited upside

The 3 months correlation between Middlefield and Carlyle is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Banc and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group and Middlefield Banc 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 Middlefield Banc are associated (or correlated) with Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Middlefield Banc i.e., Middlefield Banc and Carlyle go up and down completely randomly.

Pair Corralation between Middlefield Banc and Carlyle

Given the investment horizon of 90 days Middlefield Banc is expected to under-perform the Carlyle. In addition to that, Middlefield Banc is 1.17 times more volatile than Carlyle Group. It trades about -0.24 of its total potential returns per unit of risk. Carlyle Group is currently generating about -0.05 per unit of volatility. If you would invest  4,691  in Carlyle Group on January 28, 2024 and sell it today you would lose (80.00) from holding Carlyle Group or give up 1.71% of portfolio value over 90 days.

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

Middlefield Banc  vs.  Carlyle Group

Middlefield Banc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Middlefield Banc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Carlyle Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Middlefield Banc and Carlyle

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

The idea behind Middlefield Banc and Carlyle Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.