Correlation Between Baring Emerging and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Baring Emerging 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 Baring Emerging and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baring Emerging Europe and Sealed Air Corp, you can compare the effects of market volatilities on Baring Emerging 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 Baring Emerging with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baring Emerging and Sealed Air.
Diversification Opportunities for Baring Emerging and Sealed Air
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Baring and Sealed is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Baring Emerging Europe and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp and Baring Emerging 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 Baring Emerging Europe 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 Corp has no effect on the direction of Baring Emerging i.e., Baring Emerging and Sealed Air go up and down completely randomly.
Pair Corralation between Baring Emerging and Sealed Air
Assuming the 90 days trading horizon Baring Emerging Europe is expected to generate 0.79 times more return on investment than Sealed Air. However, Baring Emerging Europe is 1.27 times less risky than Sealed Air. It trades about 0.46 of its potential returns per unit of risk. Sealed Air Corp is currently generating about -0.02 per unit of risk. If you would invest 57,250 in Baring Emerging Europe on August 28, 2024 and sell it today you would earn a total of 5,000 from holding Baring Emerging Europe or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Baring Emerging Europe vs. Sealed Air Corp
Performance |
| Timeline |
| Baring Emerging Europe |
| Sealed Air Corp |
Baring Emerging and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baring Emerging and Sealed Air
The main advantage of trading using opposite Baring Emerging and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baring Emerging 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.| Baring Emerging vs. Catalyst Media Group | Baring Emerging vs. Oncimmune Holdings plc | Baring Emerging vs. Invesco Health Care | Baring Emerging vs. Coor Service Management |
| Sealed Air vs. Samsung Electronics Co | Sealed Air vs. Samsung Electronics Co | Sealed Air vs. Hyundai Motor | Sealed Air vs. Toyota Motor 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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