Correlation Between Carters and Installed Building

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

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

Diversification Opportunities for Carters and Installed Building

-0.01

Correlation Coefficient

Carters  Installed Building

Good diversification

The 3 months correlation between Carters and Installed is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Installed Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Installed Building and Carters 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 Carters are associated (or correlated) with Installed Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Installed Building has no effect on the direction of Carters i.e., Carters and Installed Building go up and down completely randomly.

Pair Corralation between Carters and Installed Building

Considering the 90-day investment horizon Carters is expected to generate 86.83 times less return on investment than Installed Building. In addition to that, Carters is 1.15 times more volatile than Installed Building Products. It trades about 0.0 of its total potential returns per unit of risk. Installed Building Products is currently generating about 0.16 per unit of volatility. If you would invest  18,547  in Installed Building Products on July 21, 2025 and sell it today you would earn a total of  7,153  from holding Installed Building Products or generate 38.57% return on investment over 90 days.

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

Carters  vs.  Installed Building Products

Carters

Risk-Adjusted Performance

Weakest

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Carters is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Installed Building

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Installed Building Products are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Installed Building reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carters and Installed Building

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

The idea behind Carters and Installed Building Products 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 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.