Correlation Between Sealed Air and Iron Mountain
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Iron Mountain 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 Iron Mountain 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 Iron Mountain, you can compare the effects of market volatilities on Sealed Air and Iron Mountain 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 Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Iron Mountain.
Diversification Opportunities for Sealed Air and Iron Mountain
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and Iron is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Sealed Air i.e., Sealed Air and Iron Mountain go up and down completely randomly.
Pair Corralation between Sealed Air and Iron Mountain
Assuming the 90 days trading horizon Sealed Air Corp is expected to generate 0.87 times more return on investment than Iron Mountain. However, Sealed Air Corp is 1.15 times less risky than Iron Mountain. It trades about -0.29 of its potential returns per unit of risk. Iron Mountain is currently generating about -0.3 per unit of risk. If you would invest 3,753 in Sealed Air Corp on October 10, 2024 and sell it today you would lose (326.00) from holding Sealed Air Corp or give up 8.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Sealed Air Corp vs. Iron Mountain
Performance |
| Timeline |
| Sealed Air Corp |
| Iron Mountain |
Sealed Air and Iron Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Iron Mountain
The main advantage of trading using opposite Sealed Air and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.| Sealed Air vs. LPKF Laser Electronics | Sealed Air vs. STMicroelectronics NV | Sealed Air vs. Universal Music Group | Sealed Air vs. Gear4music Plc |
| Iron Mountain vs. Veolia Environnement VE | Iron Mountain vs. Ironveld Plc | Iron Mountain vs. Foresight Environmental Infrastructure | Iron Mountain vs. Solstad Offshore ASA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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