Correlation Between Dover and Ametek

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

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

Diversification Opportunities for Dover and Ametek

0.87

Correlation Coefficient

Dover  Ametek

Very poor diversification

The 3 months correlation between Dover and Ametek is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dover and Ametek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ametek Inc and Dover 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 Dover 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 Dover i.e., Dover and Ametek go up and down completely randomly.

Pair Corralation between Dover and Ametek

Considering the 90-day investment horizon Dover is expected to under-perform the Ametek. But the stock apears to be less risky and, when comparing its historical volatility, Dover is 1.02 times less risky than Ametek. The stock trades about -0.37 of its potential returns per unit of risk. The Ametek Inc is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest  19,684  in Ametek Inc on September 26, 2024 and sell it today you would lose (1,279) from holding Ametek Inc or give up 6.5% of portfolio value over 90 days.

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

Dover  vs.  Ametek Inc

Dover

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dover has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dover is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ametek Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ametek Inc are ranked lower than 6 (%) 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 January 2025.

Pair Trading with Dover and Ametek

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