Correlation Between Carrier Global and SPX Corp

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

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

Diversification Opportunities for Carrier Global and SPX Corp

0.58

Correlation Coefficient

Carrier Global  SPX Corp

Very weak diversification

The 3 months correlation between Carrier and SPX is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Carrier Global Corp and SPX Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPX Corp and Carrier Global 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 Global Corp are associated (or correlated) with SPX Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPX Corp has no effect on the direction of Carrier Global i.e., Carrier Global and SPX Corp go up and down completely randomly.

Pair Corralation between Carrier Global and SPX Corp

Given the investment horizon of 90 days Carrier Global Corp is expected to under-perform the SPX Corp. In addition to that, Carrier Global is 1.16 times more volatile than SPX Corp. It trades about -0.03 of its total potential returns per unit of risk. SPX Corp is currently generating about 0.27 per unit of volatility. If you would invest  14,758  in SPX Corp on May 4, 2025 and sell it today you would earn a total of  4,878  from holding SPX Corp or generate 33.05% return on investment over 90 days.

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

Carrier Global Corp  vs.  SPX Corp

Carrier Global Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrier Global Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Carrier Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

SPX Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPX Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, SPX Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carrier Global and SPX Corp

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

The idea behind Carrier Global Corp and SPX Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.