Correlation Between CCL Industries and Crown Holdings
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Crown Holdings 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 CCL Industries and Crown Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Crown Holdings, you can compare the effects of market volatilities on CCL Industries and Crown Holdings 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 CCL Industries with a short position of Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Crown Holdings.
Diversification Opportunities for CCL Industries and Crown Holdings
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CCL and Crown is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and CCL Industries 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 CCL Industries are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of CCL Industries i.e., CCL Industries and Crown Holdings go up and down completely randomly.
Pair Corralation between CCL Industries and Crown Holdings
Assuming the 90 days horizon CCL Industries is expected to under-perform the Crown Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CCL Industries is 1.06 times less risky than Crown Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Crown Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,434 in Crown Holdings on August 29, 2024 and sell it today you would earn a total of 366.00 from holding Crown Holdings or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CCL Industries vs. Crown Holdings
Performance |
| Timeline |
| CCL Industries |
| Crown Holdings |
CCL Industries and Crown Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Crown Holdings
The main advantage of trading using opposite CCL Industries and Crown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Crown Holdings 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 Crown Holdings will offset losses from the drop in Crown Holdings' long position.| CCL Industries vs. ETFS Coffee ETC | CCL Industries vs. XLMedia PLC | CCL Industries vs. Seven West Media | CCL Industries vs. Live Nation Entertainment |
| Crown Holdings vs. CNVISION MEDIA | Crown Holdings vs. PT Global Mediacom | Crown Holdings vs. Beijing Media | Crown Holdings vs. Data3 Limited |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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