Correlation Between Sealed Air and VF Corp
Can any of the company-specific risk be diversified away by investing in both Sealed Air and VF Corp 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 VF Corp 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 VF Corp, you can compare the effects of market volatilities on Sealed Air and VF Corp 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 VF Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and VF Corp.
Diversification Opportunities for Sealed Air and VF Corp
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sealed and 0R30 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and VF Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corp 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 VF Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corp has no effect on the direction of Sealed Air i.e., Sealed Air and VF Corp go up and down completely randomly.
Pair Corralation between Sealed Air and VF Corp
Assuming the 90 days trading horizon Sealed Air is expected to generate 3.22 times less return on investment than VF Corp. But when comparing it to its historical volatility, Sealed Air Corp is 1.54 times less risky than VF Corp. It trades about 0.26 of its potential returns per unit of risk. VF Corp is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 2,119 in VF Corp on October 29, 2024 and sell it today you would earn a total of 511.00 from holding VF Corp or generate 24.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Sealed Air Corp vs. VF Corp
Performance |
| Timeline |
| Sealed Air Corp |
| VF Corp |
Sealed Air and VF Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and VF Corp
The main advantage of trading using opposite Sealed Air and VF Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, VF Corp 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 VF Corp will offset losses from the drop in VF Corp's long position.| Sealed Air vs. United States Steel | Sealed Air vs. Gaztransport et Technigaz | Sealed Air vs. UNIQA Insurance Group | Sealed Air vs. Tata Steel Limited |
| VF Corp vs. Fortuna Silver Mines | VF Corp vs. Beowulf Mining | VF Corp vs. Verizon Communications | VF Corp vs. Gaztransport et Technigaz |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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