Correlation Between Sealed Air and Air Products
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Air Products 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 Sealed Air and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air Corp and Air Products Chemicals, you can compare the effects of market volatilities on Sealed Air and Air Products 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 Sealed Air with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Air Products.
Diversification Opportunities for Sealed Air and Air Products
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sealed and Air is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Sealed Air 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 Sealed Air Corp are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Sealed Air i.e., Sealed Air and Air Products go up and down completely randomly.
Pair Corralation between Sealed Air and Air Products
Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Air Products. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air Corp is 1.06 times less risky than Air Products. The stock trades about -0.33 of its potential returns per unit of risk. The Air Products Chemicals is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 32,525 in Air Products Chemicals on November 28, 2024 and sell it today you would lose (840.00) from holding Air Products Chemicals or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Sealed Air Corp vs. Air Products Chemicals
Performance |
| Timeline |
| Sealed Air Corp |
| Air Products Chemicals |
Sealed Air and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Air Products
The main advantage of trading using opposite Sealed Air and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Sealed Air vs. Schroders Investment Trusts | Sealed Air vs. AMG Advanced Metallurgical | Sealed Air vs. Aurora Investment Trust | Sealed Air vs. BlackRock Frontiers Investment |
| Air Products vs. Flutter Entertainment PLC | Air Products vs. LBG Media PLC | Air Products vs. Electronic Arts | Air Products vs. G5 Entertainment AB |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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