Correlation Between Ametek and Graco

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

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

Diversification Opportunities for Ametek and Graco

0.73

Correlation Coefficient

Ametek  Graco

Poor diversification

The 3 months correlation between Ametek and Graco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ametek Inc and Graco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graco Inc 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 Graco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graco Inc has no effect on the direction of Ametek i.e., Ametek and Graco go up and down completely randomly.

Pair Corralation between Ametek and Graco

Considering the 90-day investment horizon Ametek Inc is expected to under-perform the Graco. But the stock apears to be less risky and, when comparing its historical volatility, Ametek Inc is 1.02 times less risky than Graco. The stock trades about -0.02 of its potential returns per unit of risk. The Graco Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,350  in Graco Inc on December 28, 2024 and sell it today you would earn a total of  110.00  from holding Graco Inc or generate 1.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ametek Inc  vs.  Graco Inc

Ametek Inc

Risk-Adjusted Performance

Very Weak

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

Graco Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Graco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ametek and Graco

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

The idea behind Ametek Inc and Graco 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.