Correlation Between Graphic Packaging and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both Graphic Packaging and Reliance Steel 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 Graphic Packaging and Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphic Packaging Holding and Reliance Steel Aluminum, you can compare the effects of market volatilities on Graphic Packaging and Reliance Steel 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 Graphic Packaging with a short position of Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphic Packaging and Reliance Steel.
Diversification Opportunities for Graphic Packaging and Reliance Steel
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Graphic and Reliance is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum and Graphic Packaging 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 Graphic Packaging Holding are associated (or correlated) with Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of Graphic Packaging i.e., Graphic Packaging and Reliance Steel go up and down completely randomly.
Pair Corralation between Graphic Packaging and Reliance Steel
Assuming the 90 days horizon Graphic Packaging Holding is expected to generate 0.99 times more return on investment than Reliance Steel. However, Graphic Packaging Holding is 1.01 times less risky than Reliance Steel. It trades about 0.09 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about -0.15 per unit of risk. If you would invest 2,726 in Graphic Packaging Holding on September 13, 2024 and sell it today you would earn a total of 59.00 from holding Graphic Packaging Holding or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Graphic Packaging Holding vs. Reliance Steel Aluminum
Performance |
| Timeline |
| Graphic Packaging Holding |
| Reliance Steel Aluminum |
Graphic Packaging and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphic Packaging and Reliance Steel
The main advantage of trading using opposite Graphic Packaging and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphic Packaging position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| Graphic Packaging vs. DALATA HOTEL | Graphic Packaging vs. HYATT HOTELS A | Graphic Packaging vs. Carsales | Graphic Packaging vs. Choice Hotels International |
| Reliance Steel vs. HYATT HOTELS A | Reliance Steel vs. Host Hotels Resorts | Reliance Steel vs. Games Workshop Group | Reliance Steel vs. INTERCONT HOTELS |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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