Correlation Between Clearwater Paper and UPM-Kymmene Oyj
Can any of the company-specific risk be diversified away by investing in both Clearwater Paper and UPM-Kymmene Oyj 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 UPM-Kymmene Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearwater Paper and UPM Kymmene Oyj, you can compare the effects of market volatilities on Clearwater Paper and UPM-Kymmene Oyj 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 UPM-Kymmene Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearwater Paper and UPM-Kymmene Oyj.
Diversification Opportunities for Clearwater Paper and UPM-Kymmene Oyj
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clearwater and UPM-Kymmene is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Paper and UPM Kymmene Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPM Kymmene Oyj 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 UPM-Kymmene Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPM Kymmene Oyj has no effect on the direction of Clearwater Paper i.e., Clearwater Paper and UPM-Kymmene Oyj go up and down completely randomly.
Pair Corralation between Clearwater Paper and UPM-Kymmene Oyj
Considering the 90-day investment horizon Clearwater Paper is expected to under-perform the UPM-Kymmene Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Clearwater Paper is 1.15 times less risky than UPM-Kymmene Oyj. The stock trades about -0.03 of its potential returns per unit of risk. The UPM Kymmene Oyj is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,431 in UPM Kymmene Oyj on September 4, 2024 and sell it today you would lose (853.00) from holding UPM Kymmene Oyj or give up 24.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.93% |
| Values | Daily Returns |
Clearwater Paper vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Clearwater Paper |
| UPM Kymmene Oyj |
Clearwater Paper and UPM-Kymmene Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearwater Paper and UPM-Kymmene Oyj
The main advantage of trading using opposite Clearwater Paper and UPM-Kymmene Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Paper position performs unexpectedly, UPM-Kymmene Oyj 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 UPM-Kymmene Oyj will offset losses from the drop in UPM-Kymmene Oyj'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 |
| UPM-Kymmene Oyj vs. Clearwater Paper | UPM-Kymmene Oyj vs. Suzano Papel e | UPM-Kymmene Oyj vs. UPM Kymmene Oyj | UPM-Kymmene Oyj vs. BASF SE NA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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