Correlation Between IMedia Brands and Clearwater Paper

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

Diversification Opportunities for IMedia Brands and Clearwater Paper

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between IMedia and Clearwater is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding IMedia Brands and Clearwater Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Paper and IMedia Brands 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 IMedia Brands 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 IMedia Brands i.e., IMedia Brands and Clearwater Paper go up and down completely randomly.

Pair Corralation between IMedia Brands and Clearwater Paper

Given the investment horizon of 90 days IMedia Brands is expected to under-perform the Clearwater Paper. In addition to that, IMedia Brands is 1.83 times more volatile than Clearwater Paper. It trades about -0.05 of its total potential returns per unit of risk. Clearwater Paper is currently generating about 0.02 per unit of volatility. If you would invest  3,776  in Clearwater Paper on September 7, 2022 and sell it today you would earn a total of  76.00  from holding Clearwater Paper or generate 2.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

IMedia Brands  vs.  Clearwater Paper

 Performance (%) 
       Timeline  
IMedia Brands 
IMedia Performance
0 of 100
Over the last 90 days IMedia Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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

Clearwater Price Channel

IMedia Brands and Clearwater Paper Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IMedia Brands and Clearwater Paper

The main advantage of trading using opposite IMedia Brands and Clearwater Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMedia Brands 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 IMedia Brands 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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