Correlation Between Astar and Clearwater Paper
Can any of the company-specific risk be diversified away by investing in both Astar 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 Astar and Clearwater Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Clearwater Paper, you can compare the effects of market volatilities on Astar 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 Astar with a short position of Clearwater Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Clearwater Paper.
Diversification Opportunities for Astar and Clearwater Paper
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Astar and Clearwater is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Clearwater Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Paper and Astar 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 Astar 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 Astar i.e., Astar and Clearwater Paper go up and down completely randomly.
Pair Corralation between Astar and Clearwater Paper
Assuming the 90 days trading horizon Astar is expected to generate 2.9 times more return on investment than Clearwater Paper. However, Astar is 2.9 times more volatile than Clearwater Paper. It trades about 0.03 of its potential returns per unit of risk. Clearwater Paper is currently generating about 0.0 per unit of risk. If you would invest 5.89 in Astar on October 20, 2024 and sell it today you would earn a total of 0.47 from holding Astar or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.2% |
| Values | Daily Returns |
Astar vs. Clearwater Paper
Performance |
| Timeline |
| Astar |
| Clearwater Paper |
Astar and Clearwater Paper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Clearwater Paper
The main advantage of trading using opposite Astar and Clearwater Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.The idea behind Astar 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.| Clearwater Paper vs. Sylvamo Corp | Clearwater Paper vs. Suzano Papel e | Clearwater Paper vs. Klabin Sa A | Clearwater Paper vs. Mercer International |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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