Correlation Between Triad Group and Ametek

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

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

Diversification Opportunities for Triad Group and Ametek

0.44

Correlation Coefficient

Triad Group  Ametek

Very weak diversification

The 3 months correlation between Triad and Ametek is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group PLC and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Triad Group 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 Triad Group PLC 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 Triad Group i.e., Triad Group and Ametek go up and down completely randomly.

Pair Corralation between Triad Group and Ametek

Assuming the 90 days trading horizon Triad Group PLC is expected to under-perform the Ametek. But the stock apears to be less risky and, when comparing its historical volatility, Triad Group PLC is 1.09 times less risky than Ametek. The stock trades about -0.1 of its potential returns per unit of risk. The Ametek Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  16,755  in Ametek Inc on September 27, 2024 and sell it today you would earn a total of  1,560  from holding Ametek Inc or generate 9.31% return on investment over 90 days.

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

Triad Group PLC  vs.  Ametek Inc

Triad Group PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ametek Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ametek may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Triad Group and Ametek

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

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 the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.