Correlation Between Major Drilling and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both Major Drilling and SEALED AIR 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 Major Drilling and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and SEALED AIR , you can compare the effects of market volatilities on Major Drilling and SEALED AIR 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 Major Drilling with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and SEALED AIR.
Diversification Opportunities for Major Drilling and SEALED AIR
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Major and SEALED is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and Major Drilling 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 Major Drilling Group are associated (or correlated) with SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of Major Drilling i.e., Major Drilling and SEALED AIR go up and down completely randomly.
Pair Corralation between Major Drilling and SEALED AIR
Assuming the 90 days horizon Major Drilling Group is expected to under-perform the SEALED AIR. In addition to that, Major Drilling is 1.49 times more volatile than SEALED AIR . It trades about -0.01 of its total potential returns per unit of risk. SEALED AIR is currently generating about 0.02 per unit of volatility. If you would invest 3,180 in SEALED AIR on October 18, 2024 and sell it today you would earn a total of 80.00 from holding SEALED AIR or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. SEALED AIR
Performance |
| Timeline |
| Major Drilling Group |
| SEALED AIR |
Major Drilling and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and SEALED AIR
The main advantage of trading using opposite Major Drilling and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, SEALED AIR 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 SEALED AIR will offset losses from the drop in SEALED AIR's long position.| Major Drilling vs. AGRICULTBK HADR25 YC | Major Drilling vs. Granite Construction | Major Drilling vs. Summit Materials | Major Drilling vs. The Yokohama Rubber |
| SEALED AIR vs. NorAm Drilling AS | SEALED AIR vs. Zoom Video Communications | SEALED AIR vs. PARKEN Sport Entertainment | SEALED AIR vs. Major Drilling Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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