Correlation Between Clearwater Paper and Healthequity

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

Diversification Opportunities for Clearwater Paper and Healthequity

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Clearwater and Healthequity is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Paper Corp and Healthequity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthequity 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 Corp are associated (or correlated) with Healthequity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthequity has no effect on the direction of Clearwater Paper i.e., Clearwater Paper and Healthequity go up and down completely randomly.

Pair Corralation between Clearwater Paper and Healthequity

Considering the 90-day investment horizon Clearwater Paper Corp is expected to generate 1.08 times more return on investment than Healthequity. However, Clearwater Paper is 1.08 times more volatile than Healthequity. It trades about 0.02 of its potential returns per unit of risk. Healthequity is currently generating about 0.01 per unit of risk. If you would invest  3,720  in Clearwater Paper Corp on August 31, 2022 and sell it today you would earn a total of  100.00  from holding Clearwater Paper Corp or generate 2.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Clearwater Paper Corp  vs.  Healthequity

 Performance (%) 
       Timeline  
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

Healthequity 
Healthequity Performance
0 of 100
Over the last 90 days Healthequity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Healthequity is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Healthequity Price Channel

Clearwater Paper and Healthequity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clearwater Paper and Healthequity

The main advantage of trading using opposite Clearwater Paper and Healthequity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Paper position performs unexpectedly, Healthequity 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 Healthequity will offset losses from the drop in Healthequity's long position.
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The idea behind Clearwater Paper Corp and Healthequity 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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