Correlation Between Sealed Air and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Hilton Food 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 Hilton Food 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 Hilton Food Group, you can compare the effects of market volatilities on Sealed Air and Hilton Food 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 Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Hilton Food.
Diversification Opportunities for Sealed Air and Hilton Food
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sealed and Hilton is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food 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 Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Sealed Air i.e., Sealed Air and Hilton Food go up and down completely randomly.
Pair Corralation between Sealed Air and Hilton Food
Assuming the 90 days trading horizon Sealed Air is expected to generate 8.76 times less return on investment than Hilton Food. But when comparing it to its historical volatility, Sealed Air Corp is 1.02 times less risky than Hilton Food. It trades about 0.01 of its potential returns per unit of risk. Hilton Food Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 87,570 in Hilton Food Group on September 20, 2024 and sell it today you would earn a total of 3,530 from holding Hilton Food Group or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.75% |
| Values | Daily Returns |
Sealed Air Corp vs. Hilton Food Group
Performance |
| Timeline |
| Sealed Air Corp |
| Hilton Food Group |
Sealed Air and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Hilton Food
The main advantage of trading using opposite Sealed Air and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food's long position.| Sealed Air vs. Zoom Video Communications | Sealed Air vs. Gruppo MutuiOnline SpA | Sealed Air vs. Universal Display Corp | Sealed Air vs. International Biotechnology Trust |
| Hilton Food vs. Samsung Electronics Co | Hilton Food vs. Samsung Electronics Co | Hilton Food vs. Hyundai Motor | Hilton Food 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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