Correlation Between Ametek and Capstone Green

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

By analyzing existing cross correlation between Ametek Inc and Capstone Green Energy, you can compare the effects of market volatilities on Ametek and Capstone Green 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 Capstone Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ametek and Capstone Green.

Diversification Opportunities for Ametek and Capstone Green

-0.24

Correlation Coefficient

Ametek Capstone Green

Very good diversification

The 3 months correlation between Ametek and Capstone is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy 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 Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of Ametek i.e., Ametek and Capstone Green go up and down completely randomly.

Pair Corralation between Ametek and Capstone Green

Considering the 90-day investment horizon Ametek Inc is expected to generate 0.28 times more return on investment than Capstone Green. However, Ametek Inc is 3.53 times less risky than Capstone Green. It trades about 0.06 of its potential returns per unit of risk. Capstone Green Energy is currently generating about -0.04 per unit of risk. If you would invest  12,475  in Ametek Inc on March 2, 2023 and sell it today you would earn a total of  2,032  from holding Ametek Inc or generate 16.29% return on investment over 90 days.

Ametek Inc  vs.  Capstone Green Energy

Ametek Inc

Ametek Performance

2 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Ametek is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Capstone Green Energy

Capstone Performance

0 of 100

Over the last 90 days Capstone Green Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2023. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Pair Trading with Ametek and Capstone Green

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

The idea behind Ametek Inc and Capstone Green Energy 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.