Correlation Between LAir Liquide and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both LAir Liquide 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 LAir Liquide and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAir Liquide SA and SEALED AIR , you can compare the effects of market volatilities on LAir Liquide 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 LAir Liquide with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and SEALED AIR.
Diversification Opportunities for LAir Liquide and SEALED AIR
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LAir and SEALED is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and LAir Liquide 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 LAir Liquide SA 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 LAir Liquide i.e., LAir Liquide and SEALED AIR go up and down completely randomly.
Pair Corralation between LAir Liquide and SEALED AIR
Assuming the 90 days trading horizon LAir Liquide SA is expected to generate 0.56 times more return on investment than SEALED AIR. However, LAir Liquide SA is 1.8 times less risky than SEALED AIR. It trades about 0.05 of its potential returns per unit of risk. SEALED AIR is currently generating about -0.03 per unit of risk. If you would invest 12,256 in LAir Liquide SA on August 25, 2024 and sell it today you would earn a total of 3,726 from holding LAir Liquide SA or generate 30.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAir Liquide SA vs. SEALED AIR
Performance |
| Timeline |
| LAir Liquide SA |
| SEALED AIR |
LAir Liquide and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAir Liquide and SEALED AIR
The main advantage of trading using opposite LAir Liquide and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide 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.| LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc | LAir Liquide vs. Apple Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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