Correlation Between Ametek and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Ametek and Rockwell Automation 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 Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ametek Inc and Rockwell Automation, you can compare the effects of market volatilities on Ametek and Rockwell Automation 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 Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ametek and Rockwell Automation.
Diversification Opportunities for Ametek and Rockwell Automation
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ametek and Rockwell is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation 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 Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Ametek i.e., Ametek and Rockwell Automation go up and down completely randomly.
Pair Corralation between Ametek and Rockwell Automation
Considering the 90-day investment horizon Ametek Inc is expected to generate 0.67 times more return on investment than Rockwell Automation. However, Ametek Inc is 1.5 times less risky than Rockwell Automation. It trades about 0.06 of its potential returns per unit of risk. Rockwell Automation is currently generating about 0.03 per unit of risk. If you would invest 13,822 in Ametek Inc on August 27, 2024 and sell it today you would earn a total of 5,916 from holding Ametek Inc or generate 42.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ametek Inc vs. Rockwell Automation
Performance |
| Timeline |
| Ametek Inc |
| Rockwell Automation |
Ametek and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ametek and Rockwell Automation
The main advantage of trading using opposite Ametek and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.The idea behind Ametek Inc and Rockwell Automation 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.| Rockwell Automation vs. Dover | Rockwell Automation vs. Illinois Tool Works | Rockwell Automation vs. Ingersoll Rand | Rockwell Automation vs. Eaton 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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