Correlation Between Ball and O I
Can any of the company-specific risk be diversified away by investing in both Ball and O I 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 O I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ball Corporation and O I Glass, you can compare the effects of market volatilities on Ball and O I 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 O I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ball and O I.
Diversification Opportunities for Ball and O I
Poor diversification
The 3 months correlation between Ball and O I is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ball Corp. and O I Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O I Glass 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 O I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O I Glass has no effect on the direction of Ball i.e., Ball and O I go up and down completely randomly.
Pair Corralation between Ball and O I
Given the investment horizon of 90 days Ball Corporation is expected to under-perform the O I. But the stock apears to be less risky and, when comparing its historical volatility, Ball Corporation is 1.64 times less risky than O I. The stock trades about -0.08 of its potential returns per unit of risk. The O I Glass is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 995.00 in O I Glass on October 20, 2024 and sell it today you would earn a total of 47.00 from holding O I Glass or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ball Corp. vs. O I Glass
Performance |
| Timeline |
| Ball |
| O I Glass |
Ball and O I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ball and O I
The main advantage of trading using opposite Ball and O I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ball position performs unexpectedly, O I 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 O I will offset losses from the drop in O I's long position.| Ball vs. Graphic Packaging Holding | Ball vs. Silgan Holdings | Ball vs. Sonoco Products | Ball vs. Reynolds Consumer Products |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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