Correlation Between Ametek and ITM Power
Can any of the company-specific risk be diversified away by investing in both Ametek and ITM Power 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 Ametek and ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ametek Inc and ITM Power Plc, you can compare the effects of market volatilities on Ametek and ITM Power 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 Ametek with a short position of ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ametek and ITM Power.
Diversification Opportunities for Ametek and ITM Power
Pay attention - limited upside
The 3 months correlation between Ametek and ITM is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc and Ametek 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 Ametek Inc are associated (or correlated) with ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Ametek i.e., Ametek and ITM Power go up and down completely randomly.
Pair Corralation between Ametek and ITM Power
Considering the 90-day investment horizon Ametek Inc is expected to generate 0.28 times more return on investment than ITM Power. However, Ametek Inc is 3.52 times less risky than ITM Power. It trades about 0.35 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.24 per unit of risk. If you would invest 17,843 in Ametek Inc on September 2, 2024 and sell it today you would earn a total of 1,595 from holding Ametek Inc or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ametek Inc vs. ITM Power Plc
Performance |
| Timeline |
| Ametek Inc |
| ITM Power Plc |
Ametek and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ametek and ITM Power
The main advantage of trading using opposite Ametek and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.The idea behind Ametek Inc and ITM Power Plc 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.| ITM Power vs. Next Hydrogen Solutions | ITM Power vs. Nel ASA | ITM Power vs. Titan Logix Corp | ITM Power vs. Weir Group PLC |
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 the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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