Correlation Between CIRCOR International and Ametek

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

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

Diversification Opportunities for CIRCOR International and Ametek

-0.3

Correlation Coefficient

CIRCOR International  Ametek

Very good diversification

The 3 months correlation between CIRCOR and Ametek is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CIRCOR International and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and CIRCOR International 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 CIRCOR International 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 CIRCOR International i.e., CIRCOR International and Ametek go up and down completely randomly.

Pair Corralation between CIRCOR International and Ametek

Considering the 90-day investment horizon CIRCOR International is expected to generate 3.21 times more return on investment than Ametek. However, CIRCOR International is 3.21 times more volatile than Ametek Inc. It trades about 0.09 of its potential returns per unit of risk. Ametek Inc is currently generating about 0.06 per unit of risk. If you would invest  1,965  in CIRCOR International on January 19, 2024 and sell it today you would earn a total of  3,635  from holding CIRCOR International or generate 184.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.75%
Values	Daily Returns

CIRCOR International  vs.  Ametek Inc

CIRCOR International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIRCOR International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, CIRCOR International is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Ametek Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 13 (%) 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.

Pair Trading with CIRCOR International and Ametek

The main advantage of trading using opposite CIRCOR International and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIRCOR International 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.

The idea behind CIRCOR International and Ametek Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.