Stress Testing CARR: Historical Drawdowns and Macro Risks
Every seasoned investor knows that market shocks are inevitable. What matters is the depth of the hit. Historically, across 6 major crises, Carrier Global (CARR) absorbs an average drawdown of -13%—measurably different from the S&P 500’s average decline of -17% over the same events.
If you are an investor in CARR stock, you might be asking: if the macroeconomic environment fractures, how far can this stock actually fall?
The answer depends entirely on the transmission mechanism of the crisis. Not all market shocks are created equal. To accurately price the risk, we have to isolate how CARR reacts to different types of systemic stress.
What Is The Stock’s Greatest Vulnerability?
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Categorical analysis of historical dislocations reveals that CARR is disproportionately vulnerable to ‘Rate & Valuation Shock’. While broad market equities are affected by such environment, CARR has historically suffered outsized downside when this mechanism triggers. During these events, the stock has averaged a -24% decline.
To internalize the risk inherent in this stock, here is exactly how it behaved during its most severe tests across three distinct macroeconomic environments.
How Does It Handle A Rate & Valuation Shock Shock?
2022 Fed Tightening Inflation Bear Market (Jan 2022 to Oct 2022)
CPI hit 9.1%, forcing aggressive tightening since Volcker. Russia’s invasion of Ukraine further spiked global energy and food prices.
Stocks and bonds fell simultaneously, eliminating the 60/40 hedge. Rising rates crushed long-duration assets until CPI declined in October 2022.
CARR stock reaction vs other assets: The stock fell -35%, while the S&P declined -24% and bonds saw -35% move
What Happens During A Sovereign & Geopolitical Risk Scare?
2025 US Tariff Shock (Feb 2025 to Jun 2025)
The Trump administration announced 145% tariffs on Chinese imports on April 2, 2025, representing the most aggressive trade action since the 1930s.
Equities and the dollar fell simultaneously, signaling lost confidence. Supply chain disruptions and small-cap input inflation drove broad declines, affecting nearly all sectors.
CARR stock reaction vs other assets: The stock fell -16%, while the S&P declined -19% and bonds saw -3.8% move
Can It Survive A Credit & Liquidity Crises Crisis?
2023 SVB Regional Banking Crisis (Feb 2023 to Jul 2023)
SVB’s long-duration Treasury portfolio was destroyed by rising rates. A March 8, 2023 loss disclosure triggered an instantaneous bank run accelerated by social media.
The FDIC seized SVB, Signature, and First Republic. Contagion was contained through deposit backstops and the Fed’s Bank Term Funding Program emergency liquidity.
CARR stock reaction vs other assets: The stock fell -11%, while the S&P declined -6.7% and bonds saw -4.3% move
Past Market Shock Drawdowns Summarized For CARR
| Shock Event | S&P | Bonds | Sector | Stock |
|---|---|---|---|---|
| 2020 COVID-19 Crash | -34% | -0.7% | -42% | -3.8% |
| 2022 Fed Tightening Inflation Bear Market | -24% | -35% | -20% | -35% |
| 2023 SVB Regional Banking Crisis | -6.7% | -4.3% | -6.2% | -11% |
| Summer-Fall 2023 Five Percent Yield Shock | -9.5% | -17% | -12% | -14% |
| 2024 Yen Carry Trade Unwind | -7.8% | -1.2% | -1.1% | -0.8% |
| 2025 US Tariff Shock | -19% | -3.8% | -16% | -16% |
So What Can You Do For Your Investments?
Panic is a failure of preparation. When a Rate & Valuation Shock shock hits, CARR will predictably contract. Recognizing this behavior as a mathematical feature rather than a flaw allows investors to avoid selling at the exact wrong moment.
Incorporating rule-based and diversified approach such as Trefis High Quality Portfolio (HQ) ensures your capital is protected enough to ride out these inevitable structural resets. HQ has returned > 105% since inception.