Correlation Between Clearwater Paper and BGC Partners

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

Diversification Opportunities for Clearwater Paper and BGC Partners

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Clearwater and BGC Partners is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Paper and BGC Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGC Partners 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 BGC Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGC Partners has no effect on the direction of Clearwater Paper i.e., Clearwater Paper and BGC Partners go up and down completely randomly.

Pair Corralation between Clearwater Paper and BGC Partners

Considering the 90-day investment horizon Clearwater Paper is expected to generate 1.13 times more return on investment than BGC Partners. However, Clearwater Paper is 1.13 times more volatile than BGC Partners. It trades about 0.02 of its potential returns per unit of risk. BGC Partners is currently generating about 0.02 per unit of risk. If you would invest  3,776  in Clearwater Paper on September 7, 2022 and sell it today you would earn a total of  49.00  from holding Clearwater Paper or generate 1.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Clearwater Paper  vs.  BGC Partners

 Performance (%) 
       Timeline  
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 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

BGC Partners 
BGC Partners Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BGC Partners are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, BGC Partners may actually be approaching a critical reversion point that can send shares even higher in January 2023.

BGC Partners Price Channel

Clearwater Paper and BGC Partners Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clearwater Paper and BGC Partners

The main advantage of trading using opposite Clearwater Paper and BGC Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Paper position performs unexpectedly, BGC Partners 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 BGC Partners will offset losses from the drop in BGC Partners' long position.
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The idea behind Clearwater Paper and BGC Partners 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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