Correlation Between Sealed Air and Gfinity PLC
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Gfinity PLC 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 Gfinity PLC 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 Gfinity PLC, you can compare the effects of market volatilities on Sealed Air and Gfinity PLC 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 Gfinity PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Gfinity PLC.
Diversification Opportunities for Sealed Air and Gfinity PLC
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sealed and Gfinity is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC 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 Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of Sealed Air i.e., Sealed Air and Gfinity PLC go up and down completely randomly.
Pair Corralation between Sealed Air and Gfinity PLC
Assuming the 90 days trading horizon Sealed Air is expected to generate 5.34 times less return on investment than Gfinity PLC. But when comparing it to its historical volatility, Sealed Air Corp is 14.33 times less risky than Gfinity PLC. It trades about 0.25 of its potential returns per unit of risk. Gfinity PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6.20 in Gfinity PLC on November 4, 2024 and sell it today you would earn a total of 0.55 from holding Gfinity PLC or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
Sealed Air Corp vs. Gfinity PLC
Performance |
| Timeline |
| Sealed Air Corp |
| Gfinity PLC |
Sealed Air and Gfinity PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Gfinity PLC
The main advantage of trading using opposite Sealed Air and Gfinity PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Gfinity PLC 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 Gfinity PLC will offset losses from the drop in Gfinity PLC's long position.| Sealed Air vs. Samsung Electronics Co | Sealed Air vs. Samsung Electronics Co | Sealed Air vs. Toyota Motor Corp | Sealed Air vs. Reliance Industries Ltd |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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