Correlation Between Ansell and Clearwater Paper

Can any of the company-specific risk be diversified away by investing in both Ansell 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 Ansell and Clearwater Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ansell Ltd ADR and Clearwater Paper, you can compare the effects of market volatilities on Ansell 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 Ansell with a short position of Clearwater Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ansell and Clearwater Paper.

Diversification Opportunities for Ansell and Clearwater Paper

-0.37

Correlation Coefficient

Ansell  Clearwater Paper

Very good diversification

The 3 months correlation between Ansell and Clearwater is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ansell Ltd ADR and Clearwater Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Paper and Ansell 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 Ansell Ltd ADR 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 Ansell i.e., Ansell and Clearwater Paper go up and down completely randomly.

Pair Corralation between Ansell and Clearwater Paper

If you would invest  7,761  in Ansell Ltd ADR on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Ansell Ltd ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Ansell Ltd ADR  vs.  Clearwater Paper

Ansell Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ansell Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Ansell is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Clearwater Paper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearwater Paper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ansell and Clearwater Paper

The main advantage of trading using opposite Ansell and Clearwater Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ansell 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 Ansell Ltd ADR 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.