Correlation Between Builders FirstSource and Carlisle Companies
Can any of the company-specific risk be diversified away by investing in both Builders FirstSource and Carlisle Companies 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 Builders FirstSource and Carlisle Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Builders FirstSource and Carlisle Companies Incorporated, you can compare the effects of market volatilities on Builders FirstSource and Carlisle Companies 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 Builders FirstSource with a short position of Carlisle Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Builders FirstSource and Carlisle Companies.
Diversification Opportunities for Builders FirstSource and Carlisle Companies
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Builders and Carlisle is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Builders FirstSource and Carlisle Companies Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlisle Companies and Builders FirstSource 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 Builders FirstSource are associated (or correlated) with Carlisle Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlisle Companies has no effect on the direction of Builders FirstSource i.e., Builders FirstSource and Carlisle Companies go up and down completely randomly.
Pair Corralation between Builders FirstSource and Carlisle Companies
Given the investment horizon of 90 days Builders FirstSource is expected to generate 1.04 times less return on investment than Carlisle Companies. In addition to that, Builders FirstSource is 1.93 times more volatile than Carlisle Companies Incorporated. It trades about 0.07 of its total potential returns per unit of risk. Carlisle Companies Incorporated is currently generating about 0.14 per unit of volatility. If you would invest 37,608 in Carlisle Companies Incorporated on April 26, 2025 and sell it today you would earn a total of 5,346 from holding Carlisle Companies Incorporated or generate 14.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.39% |
Values | Daily Returns |
Builders FirstSource vs. Carlisle Companies Incorporate
Performance |
Timeline |
Builders FirstSource |
Carlisle Companies |
Builders FirstSource and Carlisle Companies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Builders FirstSource and Carlisle Companies
The main advantage of trading using opposite Builders FirstSource and Carlisle Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Builders FirstSource position performs unexpectedly, Carlisle Companies 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 Carlisle Companies will offset losses from the drop in Carlisle Companies' long position.Builders FirstSource vs. AAON Inc | Builders FirstSource vs. Carrier Global Corp | Builders FirstSource vs. Louisiana Pacific | Builders FirstSource vs. Trex Company |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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