Correlation Between Clearwater Paper and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Clearwater Paper and UPM Kymmene 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 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 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearwater Paper and UPM Kymmene.
Diversification Opportunities for Clearwater Paper and UPM Kymmene
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clearwater and UPM is 0.54. 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. 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 go up and down completely randomly.
Pair Corralation between Clearwater Paper and UPM Kymmene
Considering the 90-day investment horizon Clearwater Paper is expected to under-perform the UPM Kymmene. In addition to that, Clearwater Paper is 1.71 times more volatile than UPM Kymmene Oyj. It trades about -0.02 of its total potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.02 per unit of volatility. If you would invest 3,437 in UPM Kymmene Oyj on September 14, 2024 and sell it today you would lose (688.00) from holding UPM Kymmene Oyj or give up 20.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearwater Paper vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Clearwater Paper |
| UPM Kymmene Oyj |
Clearwater Paper and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearwater Paper and UPM Kymmene
The main advantage of trading using opposite Clearwater Paper and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Paper position performs unexpectedly, UPM Kymmene 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 will offset losses from the drop in UPM Kymmene'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 vs. Mercer International | UPM Kymmene vs. Sylvamo Corp | UPM Kymmene vs. Suzano Papel e | UPM Kymmene vs. Clearwater Paper |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |