Correlation Between Clearwater Paper and IRobot

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

Diversification Opportunities for Clearwater Paper and IRobot

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Clearwater and IRobot is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Paper and IRobot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRobot 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 IRobot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRobot has no effect on the direction of Clearwater Paper i.e., Clearwater Paper and IRobot go up and down completely randomly.

Pair Corralation between Clearwater Paper and IRobot

Considering the 90-day investment horizon Clearwater Paper is expected to generate 2.17 times more return on investment than IRobot. However, Clearwater Paper is 2.17 times more volatile than IRobot. It trades about 0.07 of its potential returns per unit of risk. IRobot is currently generating about -0.23 per unit of risk. If you would invest  3,825  in Clearwater Paper on September 3, 2022 and sell it today you would earn a total of  112.00  from holding Clearwater Paper or generate 2.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Clearwater Paper  vs.  IRobot

 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 fairly stable essential indicators, Clearwater Paper is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Clearwater Price Channel

IRobot 
IRobot Performance
0 of 100
Over the last 90 days IRobot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

IRobot Price Channel

Clearwater Paper and IRobot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clearwater Paper and IRobot

The main advantage of trading using opposite Clearwater Paper and IRobot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Paper position performs unexpectedly, IRobot 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 IRobot will offset losses from the drop in IRobot's long position.
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The idea behind Clearwater Paper and IRobot 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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