Correlation Between Sealed Air and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Sealed Air and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Litigation Capital.
Diversification Opportunities for Sealed Air and Litigation Capital
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sealed and Litigation is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Sealed Air i.e., Sealed Air and Litigation Capital go up and down completely randomly.
Pair Corralation between Sealed Air and Litigation Capital
Assuming the 90 days trading horizon Sealed Air Corp is expected to generate 0.74 times more return on investment than Litigation Capital. However, Sealed Air Corp is 1.35 times less risky than Litigation Capital. It trades about -0.25 of its potential returns per unit of risk. Litigation Capital Management is currently generating about -0.31 per unit of risk. If you would invest 3,625 in Sealed Air Corp on September 24, 2024 and sell it today you would lose (271.00) from holding Sealed Air Corp or give up 7.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Sealed Air Corp vs. Litigation Capital Management
Performance |
| Timeline |
| Sealed Air Corp |
| Litigation Capital |
Sealed Air and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Litigation Capital
The main advantage of trading using opposite Sealed Air and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Sealed Air vs. Silver Bullet Data | Sealed Air vs. United Utilities Group | Sealed Air vs. Ecofin Global Utilities | Sealed Air vs. Hochschild Mining plc |
| Litigation Capital vs. Samsung Electronics Co | Litigation Capital vs. Samsung Electronics Co | Litigation Capital vs. Hyundai Motor | Litigation Capital 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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