Correlation Between Sealed Air and Capital Drilling
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Capital Drilling 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 Capital Drilling 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 Capital Drilling, you can compare the effects of market volatilities on Sealed Air and Capital Drilling 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 Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Capital Drilling.
Diversification Opportunities for Sealed Air and Capital Drilling
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sealed and Capital is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling 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 Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Sealed Air i.e., Sealed Air and Capital Drilling go up and down completely randomly.
Pair Corralation between Sealed Air and Capital Drilling
Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Capital Drilling. In addition to that, Sealed Air is 1.1 times more volatile than Capital Drilling. It trades about -0.03 of its total potential returns per unit of risk. Capital Drilling is currently generating about -0.01 per unit of volatility. If you would invest 9,631 in Capital Drilling on October 28, 2024 and sell it today you would lose (2,031) from holding Capital Drilling or give up 21.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.98% |
| Values | Daily Returns |
Sealed Air Corp vs. Capital Drilling
Performance |
| Timeline |
| Sealed Air Corp |
| Capital Drilling |
Sealed Air and Capital Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Capital Drilling
The main advantage of trading using opposite Sealed Air and Capital Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Capital Drilling 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 Capital Drilling will offset losses from the drop in Capital Drilling's long position.| Sealed Air vs. Berkshire Hathaway | Sealed Air vs. Samsung Electronics Co | Sealed Air vs. Samsung Electronics Co | Sealed Air vs. Chocoladefabriken Lindt Spruengli |
| Capital Drilling vs. Axway Software SA | Capital Drilling vs. Zoom Video Communications | Capital Drilling vs. Check Point Software | Capital Drilling vs. Batm Advanced Communications |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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