Correlation Between Sealed Air and Waste Management
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Sealed Air and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Waste Management.
Diversification Opportunities for Sealed Air and Waste Management
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and Waste is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Sealed Air i.e., Sealed Air and Waste Management go up and down completely randomly.
Pair Corralation between Sealed Air and Waste Management
Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Waste Management. In addition to that, Sealed Air is 2.05 times more volatile than Waste Management. It trades about -0.02 of its total potential returns per unit of risk. Waste Management is currently generating about 0.06 per unit of volatility. If you would invest 16,312 in Waste Management on August 24, 2024 and sell it today you would earn a total of 6,022 from holding Waste Management or generate 36.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 84.68% |
| Values | Daily Returns |
Sealed Air Corp vs. Waste Management
Performance |
| Timeline |
| Sealed Air Corp |
| Waste Management |
Sealed Air and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Waste Management
The main advantage of trading using opposite Sealed Air and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's 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 |
| Waste Management vs. Summit Materials Cl | Waste Management vs. Ryanair Holdings plc | Waste Management vs. Sealed Air Corp | Waste Management vs. Alaska Air Group |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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