Correlation Between Cerner and Clearwater Paper

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Can any of the company-specific risk be diversified away by investing in both Cerner and Clearwater Paper 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 Cerner and Clearwater Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerner and Clearwater Paper Corp, you can compare the effects of market volatilities on Cerner and Clearwater Paper 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 Cerner with a short position of Clearwater Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerner and Clearwater Paper.

Diversification Opportunities for Cerner and Clearwater Paper

  Correlation Coefficient

Very good diversification

The 3 months correlation between Cerner and Clearwater is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cerner Corp. and Clearwater Paper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Paper Corp and Cerner 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 Cerner are associated (or correlated) with Clearwater Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearwater Paper Corp has no effect on the direction of Cerner i.e., Cerner and Clearwater Paper go up and down completely randomly.

Pair Corralation between Cerner and Clearwater Paper

Given the investment horizon of 90 days Cerner is expected to generate 4.04 times less return on investment than Clearwater Paper. But when comparing it to its historical volatility, Cerner is 27.18 times less risky than Clearwater Paper. It trades about 0.31 of its potential returns per unit of risk. Clearwater Paper Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,418  in Clearwater Paper Corp on August 30, 2022 and sell it today you would earn a total of  431.00  from holding Clearwater Paper Corp or generate 12.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
ValuesDaily Returns

Cerner Corp.  vs.  Clearwater Paper Corp

 Performance (%) 
Cerner Performance
0 of 100
Over the last 90 days Cerner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Cerner is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.
Clearwater Paper Corp 
Clearwater Performance
0 of 100
Over the last 90 days Clearwater Paper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Clearwater Price Channel

Cerner and Clearwater Paper Volatility Contrast

   Predicted Return Density   

Pair Trading with Cerner and Clearwater Paper

The main advantage of trading using opposite Cerner and Clearwater Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerner position performs unexpectedly, Clearwater Paper 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 Clearwater Paper will offset losses from the drop in Clearwater Paper's long position.
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The idea behind Cerner and Clearwater Paper 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.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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