Correlation Between Clearwater Paper and Ametek

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

Diversification Opportunities for Clearwater Paper and Ametek

  Correlation Coefficient

Good diversification

The 3 months correlation between Clearwater and Ametek is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Paper and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Clearwater Paper 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 Clearwater Paper are associated (or correlated) with Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Clearwater Paper i.e., Clearwater Paper and Ametek go up and down completely randomly.

Pair Corralation between Clearwater Paper and Ametek

Considering the 90-day investment horizon Clearwater Paper is expected to generate 4.86 times less return on investment than Ametek. In addition to that, Clearwater Paper is 2.17 times more volatile than Ametek Inc. It trades about 0.03 of its total potential returns per unit of risk. Ametek Inc is currently generating about 0.3 per unit of volatility. If you would invest  11,535  in Ametek Inc on September 8, 2022 and sell it today you would earn a total of  2,513  from holding Ametek Inc or generate 21.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Clearwater Paper  vs.  Ametek Inc

 Performance (%) 
Clearwater Paper 
Clearwater Performance
0 of 100
Over the last 90 days Clearwater Paper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Clearwater Paper is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Clearwater Price Channel

Ametek Inc 
Ametek Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Ametek exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ametek Price Channel

Clearwater Paper and Ametek Volatility Contrast

   Predicted Return Density   

Pair Trading with Clearwater Paper and Ametek

The main advantage of trading using opposite Clearwater Paper and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Paper position performs unexpectedly, Ametek 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 Ametek will offset losses from the drop in Ametek's long position.
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The idea behind Clearwater Paper and Ametek Inc 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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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