Correlation Between Sealed Air and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Smithson Investment 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 Smithson Investment 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 Smithson Investment Trust, you can compare the effects of market volatilities on Sealed Air and Smithson Investment 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 Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Smithson Investment.
Diversification Opportunities for Sealed Air and Smithson Investment
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sealed and Smithson is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust 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 Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Sealed Air i.e., Sealed Air and Smithson Investment go up and down completely randomly.
Pair Corralation between Sealed Air and Smithson Investment
Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Smithson Investment. In addition to that, Sealed Air is 1.52 times more volatile than Smithson Investment Trust. It trades about -0.03 of its total potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.11 per unit of volatility. If you would invest 143,400 in Smithson Investment Trust on October 26, 2024 and sell it today you would earn a total of 8,600 from holding Smithson Investment Trust or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.44% |
| Values | Daily Returns |
Sealed Air Corp vs. Smithson Investment Trust
Performance |
| Timeline |
| Sealed Air Corp |
| Smithson Investment Trust |
Sealed Air and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Smithson Investment
The main advantage of trading using opposite Sealed Air and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Smithson Investment 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Sealed Air vs. Bankers Investment Trust | Sealed Air vs. Dairy Farm International | Sealed Air vs. Scandinavian Tobacco Group | Sealed Air vs. Ecofin Global Utilities |
| Smithson Investment vs. Spirent Communications plc | Smithson Investment vs. PPHE Hotel Group | Smithson Investment vs. Verizon Communications | Smithson Investment vs. Zoom Video 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |