Correlation Between Cytokinetics and Clearwater Paper

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

Diversification Opportunities for Cytokinetics and Clearwater Paper

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Cytokinetics and Clearwater is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cytokinetics and Clearwater Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Paper and Cytokinetics 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 Cytokinetics 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 has no effect on the direction of Cytokinetics i.e., Cytokinetics and Clearwater Paper go up and down completely randomly.

Pair Corralation between Cytokinetics and Clearwater Paper

Given the investment horizon of 90 days Cytokinetics is expected to under-perform the Clearwater Paper. In addition to that, Cytokinetics is 1.48 times more volatile than Clearwater Paper. It trades about -0.02 of its total potential returns per unit of risk. Clearwater Paper is currently generating about 0.14 per unit of volatility. If you would invest  3,754  in Clearwater Paper on September 10, 2022 and sell it today you would earn a total of  193.00  from holding Clearwater Paper or generate 5.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Cytokinetics  vs.  Clearwater Paper

 Performance (%) 
       Timeline  
Cytokinetics 
Cytokinetics Performance
0 of 100
Over the last 90 days Cytokinetics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Cytokinetics Price Channel

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 newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Clearwater Price Channel

Cytokinetics and Clearwater Paper Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cytokinetics and Clearwater Paper

The main advantage of trading using opposite Cytokinetics and Clearwater Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cytokinetics 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 Cytokinetics and Clearwater Paper 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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