Correlation Between Sealed Air and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Vulcan Materials 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 Vulcan Materials 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 Vulcan Materials Co, you can compare the effects of market volatilities on Sealed Air and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Vulcan Materials.
Diversification Opportunities for Sealed Air and Vulcan Materials
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and Vulcan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Sealed Air i.e., Sealed Air and Vulcan Materials go up and down completely randomly.
Pair Corralation between Sealed Air and Vulcan Materials
Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Vulcan Materials. In addition to that, Sealed Air is 1.48 times more volatile than Vulcan Materials Co. It trades about -0.02 of its total potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.07 per unit of volatility. If you would invest 17,795 in Vulcan Materials Co on August 24, 2024 and sell it today you would earn a total of 10,281 from holding Vulcan Materials Co or generate 57.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 87.32% |
| Values | Daily Returns |
Sealed Air Corp vs. Vulcan Materials Co
Performance |
| Timeline |
| Sealed Air Corp |
| Vulcan Materials |
Sealed Air and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Vulcan Materials
The main advantage of trading using opposite Sealed Air and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| Sealed Air vs. Quadrise Plc | Sealed Air vs. Intuitive Investments Group | Sealed Air vs. European Metals Holdings | Sealed Air vs. Athelney Trust plc |
| Vulcan Materials vs. Quadrise Plc | Vulcan Materials vs. Intuitive Investments Group | Vulcan Materials vs. European Metals Holdings | Vulcan Materials vs. Athelney Trust plc |
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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