Correlation Between Carlyle and Stifel Financial

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

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

Diversification Opportunities for Carlyle and Stifel Financial

0.97

Correlation Coefficient

Carlyle  Stifel Financial

Almost no diversification

The 3 months correlation between Carlyle and Stifel is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Stifel Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial and Carlyle 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 Carlyle Group are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial has no effect on the direction of Carlyle i.e., Carlyle and Stifel Financial go up and down completely randomly.

Pair Corralation between Carlyle and Stifel Financial

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 1.38 times more return on investment than Stifel Financial. However, Carlyle is 1.38 times more volatile than Stifel Financial. It trades about -0.05 of its potential returns per unit of risk. Stifel Financial is currently generating about -0.08 per unit of risk. If you would invest  5,148  in Carlyle Group on January 3, 2025 and sell it today you would lose (517.00) from holding Carlyle Group or give up 10.04% of portfolio value over 90 days.

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

Carlyle Group  vs.  Stifel Financial

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Stifel Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Carlyle and Stifel Financial

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

The idea behind Carlyle Group and Stifel Financial 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.