Correlation Between Rockwell Automation and Ametek
Can any of the company-specific risk be diversified away by investing in both Rockwell Automation and Ametek 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 Rockwell Automation and Ametek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockwell Automation and Ametek Inc, you can compare the effects of market volatilities on Rockwell Automation and Ametek 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 Rockwell Automation with a short position of Ametek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockwell Automation and Ametek.
Diversification Opportunities for Rockwell Automation and Ametek
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Rockwell and Ametek is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Rockwell Automation and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Rockwell Automation 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 Rockwell Automation are associated (or correlated) with Ametek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ametek Inc has no effect on the direction of Rockwell Automation i.e., Rockwell Automation and Ametek go up and down completely randomly.
Pair Corralation between Rockwell Automation and Ametek
Considering the 90-day investment horizon Rockwell Automation is expected to generate 1.76 times less return on investment than Ametek. In addition to that, Rockwell Automation is 1.26 times more volatile than Ametek Inc. It trades about 0.02 of its total potential returns per unit of risk. Ametek Inc is currently generating about 0.04 per unit of volatility. If you would invest 17,931 in Ametek Inc on August 27, 2024 and sell it today you would earn a total of 1,807 from holding Ametek Inc or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rockwell Automation vs. Ametek Inc
Performance |
| Timeline |
| Rockwell Automation |
| Ametek Inc |
Rockwell Automation and Ametek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockwell Automation and Ametek
The main advantage of trading using opposite Rockwell Automation and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockwell Automation position performs unexpectedly, Ametek 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 Ametek will offset losses from the drop in Ametek's long position.| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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