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
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sealed and Air is 0.95. 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. In addition to that, Sealed Air is 1.32 times more volatile than Air Products Chemicals. It trades about -0.12 of its total potential returns per unit of risk. Air Products Chemicals is currently generating about -0.09 per unit of volatility. If you would invest 32,724 in Air Products Chemicals on January 16, 2025 and sell it today you would lose (5,778) from holding Air Products Chemicals or give up 17.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.35% |
| 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. Aurora Investment Trust | Sealed Air vs. EJF Investments | Sealed Air vs. Auction Technology Group | Sealed Air vs. Kinnevik Investment AB |
| Air Products vs. Eastman Chemical Co | Air Products vs. Westlake Chemical Corp | Air Products vs. American Tower REIT | Air Products vs. Ameriprise Financial |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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