Correlation Between Sealed Air and Travel Leisure
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Travel Leisure 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 Travel Leisure 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 Travel Leisure Co, you can compare the effects of market volatilities on Sealed Air and Travel Leisure 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 Travel Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Travel Leisure.
Diversification Opportunities for Sealed Air and Travel Leisure
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sealed and Travel is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure 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 Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of Sealed Air i.e., Sealed Air and Travel Leisure go up and down completely randomly.
Pair Corralation between Sealed Air and Travel Leisure
Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Travel Leisure. In addition to that, Sealed Air is 2.26 times more volatile than Travel Leisure Co. It trades about -0.01 of its total potential returns per unit of risk. Travel Leisure Co is currently generating about 0.02 per unit of volatility. If you would invest 5,531 in Travel Leisure Co on October 12, 2024 and sell it today you would earn a total of 284.00 from holding Travel Leisure Co or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.89% |
| Values | Daily Returns |
Sealed Air Corp vs. Travel Leisure Co
Performance |
| Timeline |
| Sealed Air Corp |
| Travel Leisure |
Sealed Air and Travel Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Travel Leisure
The main advantage of trading using opposite Sealed Air and Travel Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Travel Leisure 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 Travel Leisure will offset losses from the drop in Travel Leisure's long position.| Sealed Air vs. Travel Leisure Co | Sealed Air vs. Gamma Communications PLC | Sealed Air vs. Various Eateries PLC | Sealed Air vs. Universal Display Corp |
| Travel Leisure vs. Walmart | Travel Leisure vs. BYD Co | Travel Leisure vs. Volkswagen AG | Travel Leisure vs. Volkswagen AG Non Vtg |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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