Correlation Between Ball and Crown Holdings
Can any of the company-specific risk be diversified away by investing in both Ball 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 Ball and Crown Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ball Corporation and Crown Holdings, you can compare the effects of market volatilities on Ball 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 Ball with a short position of Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ball and Crown Holdings.
Diversification Opportunities for Ball and Crown Holdings
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ball and Crown is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ball Corp. and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Ball 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 Ball Corporation 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 Ball i.e., Ball and Crown Holdings go up and down completely randomly.
Pair Corralation between Ball and Crown Holdings
Given the investment horizon of 90 days Ball Corporation is expected to under-perform the Crown Holdings. In addition to that, Ball is 1.92 times more volatile than Crown Holdings. It trades about -0.15 of its total potential returns per unit of risk. Crown Holdings is currently generating about -0.21 per unit of volatility. If you would invest 9,567 in Crown Holdings on August 24, 2024 and sell it today you would lose (466.00) from holding Crown Holdings or give up 4.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ball Corp. vs. Crown Holdings
Performance |
| Timeline |
| Ball |
| Crown Holdings |
Ball and Crown Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ball and Crown Holdings
The main advantage of trading using opposite Ball and Crown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ball 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.| Ball vs. Graphic Packaging Holding | Ball vs. Silgan Holdings | Ball vs. Sonoco Products | Ball vs. Reynolds Consumer Products |
| Crown Holdings vs. International Paper | Crown Holdings vs. O I Glass | Crown Holdings vs. Smurfit WestRock plc | Crown Holdings vs. Avery Dennison Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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