Correlation Between Sealed Air and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Charter Communications 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 Charter Communications 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 Charter Communications Cl, you can compare the effects of market volatilities on Sealed Air and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Charter Communications.
Diversification Opportunities for Sealed Air and Charter Communications
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sealed and Charter is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Sealed Air i.e., Sealed Air and Charter Communications go up and down completely randomly.
Pair Corralation between Sealed Air and Charter Communications
Assuming the 90 days trading horizon Sealed Air is expected to generate 165.88 times less return on investment than Charter Communications. But when comparing it to its historical volatility, Sealed Air Corp is 2.99 times less risky than Charter Communications. It trades about 0.0 of its potential returns per unit of risk. Charter Communications Cl is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 33,307 in Charter Communications Cl on August 31, 2024 and sell it today you would earn a total of 6,032 from holding Charter Communications Cl or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sealed Air Corp vs. Charter Communications Cl
Performance |
| Timeline |
| Sealed Air Corp |
| Charter Communications |
Sealed Air and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Charter Communications
The main advantage of trading using opposite Sealed Air and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Sealed Air vs. Neometals | Sealed Air vs. Coor Service Management | Sealed Air vs. Aeorema Communications Plc | Sealed Air vs. JLEN Environmental Assets |
| Charter Communications vs. Neometals | Charter Communications vs. Coor Service Management | Charter Communications vs. Aeorema Communications Plc | Charter Communications vs. JLEN Environmental Assets |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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