Correlation Between Sealed Air and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Sealed Air and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Scandic Hotels.
Diversification Opportunities for Sealed Air and Scandic Hotels
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sealed and Scandic is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Sealed Air i.e., Sealed Air and Scandic Hotels go up and down completely randomly.
Pair Corralation between Sealed Air and Scandic Hotels
Assuming the 90 days trading horizon Sealed Air is expected to generate 2.37 times less return on investment than Scandic Hotels. In addition to that, Sealed Air is 1.25 times more volatile than Scandic Hotels Group. It trades about 0.03 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.1 per unit of volatility. If you would invest 4,639 in Scandic Hotels Group on September 4, 2024 and sell it today you would earn a total of 2,114 from holding Scandic Hotels Group or generate 45.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.77% |
| Values | Daily Returns |
Sealed Air Corp vs. Scandic Hotels Group
Performance |
| Timeline |
| Sealed Air Corp |
| Scandic Hotels Group |
Sealed Air and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Scandic Hotels
The main advantage of trading using opposite Sealed Air and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Sealed Air vs. Samsung Electronics Co | Sealed Air vs. Samsung Electronics Co | Sealed Air vs. Hyundai Motor | Sealed Air vs. Toyota Motor Corp |
| Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Hyundai Motor | Scandic Hotels vs. Toyota Motor Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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