Correlation Between Ametek and Altra Industrial

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

By analyzing existing cross correlation between Ametek Inc and Altra Industrial Motion, you can compare the effects of market volatilities on Ametek and Altra Industrial 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 Ametek with a short position of Altra Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ametek and Altra Industrial.

Diversification Opportunities for Ametek and Altra Industrial

0.94

Correlation Coefficient

Ametek  Altra Industrial

Almost no diversification

The 3 months correlation between Ametek and Altra is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Altra Industrial Motion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altra Industrial Motion and Ametek 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 Ametek Inc are associated (or correlated) with Altra Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altra Industrial Motion has no effect on the direction of Ametek i.e., Ametek and Altra Industrial go up and down completely randomly.

Pair Corralation between Ametek and Altra Industrial

If you would invest  6,198  in Altra Industrial Motion on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Altra Industrial Motion or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	4.76%
Values	Daily Returns

Ametek Inc  vs.  Altra Industrial Motion

Ametek Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal primary indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Altra Industrial Motion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altra Industrial Motion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Altra Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ametek and Altra Industrial

The main advantage of trading using opposite Ametek and Altra Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ametek position performs unexpectedly, Altra Industrial 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 Altra Industrial will offset losses from the drop in Altra Industrial's long position.

The idea behind Ametek Inc and Altra Industrial Motion 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.