Correlation Between Graco and Ametek

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

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

Diversification Opportunities for Graco and Ametek

0.73

Correlation Coefficient

Graco  Ametek

Poor diversification

The 3 months correlation between Graco and Ametek is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Graco 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 Graco Inc 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 Graco i.e., Graco and Ametek go up and down completely randomly.

Pair Corralation between Graco and Ametek

Considering the 90-day investment horizon Graco Inc is expected to generate 1.02 times more return on investment than Ametek. However, Graco is 1.02 times more volatile than Ametek Inc. It trades about 0.02 of its potential returns per unit of risk. Ametek Inc is currently generating about -0.02 per unit of risk. 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

Graco Inc  vs.  Ametek Inc

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.

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.

Pair Trading with Graco and Ametek

The main advantage of trading using opposite Graco and Ametek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco 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 Graco Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.