Correlation Between Clearwater Paper and BASF SE
Can any of the company-specific risk be diversified away by investing in both Clearwater Paper and BASF SE 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 Clearwater Paper and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearwater Paper and BASF SE NA, you can compare the effects of market volatilities on Clearwater Paper and BASF SE 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 Clearwater Paper with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearwater Paper and BASF SE.
Diversification Opportunities for Clearwater Paper and BASF SE
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Clearwater and BASF is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Paper and BASF SE NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE NA and Clearwater Paper 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 Clearwater Paper are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE NA has no effect on the direction of Clearwater Paper i.e., Clearwater Paper and BASF SE go up and down completely randomly.
Pair Corralation between Clearwater Paper and BASF SE
Considering the 90-day investment horizon Clearwater Paper is expected to generate 1.17 times more return on investment than BASF SE. However, Clearwater Paper is 1.17 times more volatile than BASF SE NA. It trades about 0.08 of its potential returns per unit of risk. BASF SE NA is currently generating about -0.19 per unit of risk. If you would invest 2,610 in Clearwater Paper on August 31, 2024 and sell it today you would earn a total of 129.00 from holding Clearwater Paper or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearwater Paper vs. BASF SE NA
Performance |
| Timeline |
| Clearwater Paper |
| BASF SE NA |
Clearwater Paper and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearwater Paper and BASF SE
The main advantage of trading using opposite Clearwater Paper and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Paper position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Clearwater Paper vs. Sylvamo Corp | Clearwater Paper vs. Suzano Papel e | Clearwater Paper vs. Klabin Sa A | Clearwater Paper vs. Mercer International |
| BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. BASF SE ADR | BASF SE vs. Braskem SA Class | BASF SE vs. Celanese |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |