Correlation Between Sealed Air and Hollywood Bowl
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Hollywood Bowl 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 Hollywood Bowl 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 Hollywood Bowl Group, you can compare the effects of market volatilities on Sealed Air and Hollywood Bowl 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 Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Hollywood Bowl.
Diversification Opportunities for Sealed Air and Hollywood Bowl
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sealed and Hollywood is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl 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 Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Sealed Air i.e., Sealed Air and Hollywood Bowl go up and down completely randomly.
Pair Corralation between Sealed Air and Hollywood Bowl
Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Hollywood Bowl. In addition to that, Sealed Air is 1.3 times more volatile than Hollywood Bowl Group. It trades about -0.02 of its total potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.04 per unit of volatility. If you would invest 22,308 in Hollywood Bowl Group on November 6, 2024 and sell it today you would earn a total of 5,792 from holding Hollywood Bowl Group or generate 25.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.15% |
| Values | Daily Returns |
Sealed Air Corp vs. Hollywood Bowl Group
Performance |
| Timeline |
| Sealed Air Corp |
| Hollywood Bowl Group |
Sealed Air and Hollywood Bowl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Hollywood Bowl
The main advantage of trading using opposite Sealed Air and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.| Sealed Air vs. Vienna Insurance Group | Sealed Air vs. United Airlines Holdings | Sealed Air vs. International Consolidated Airlines | Sealed Air vs. Sabre Insurance Group |
| Hollywood Bowl vs. Herald Investment Trust | Hollywood Bowl vs. Gear4music Plc | Hollywood Bowl vs. Smithson Investment Trust | Hollywood Bowl vs. Bankers Investment Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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