Correlation Between Crown Holdings and Ardagh Metal
Can any of the company-specific risk be diversified away by investing in both Crown Holdings and Ardagh Metal 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 Crown Holdings and Ardagh Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Holdings and Ardagh Metal Packaging, you can compare the effects of market volatilities on Crown Holdings and Ardagh Metal 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 Crown Holdings with a short position of Ardagh Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Holdings and Ardagh Metal.
Diversification Opportunities for Crown Holdings and Ardagh Metal
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crown and Ardagh is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and Ardagh Metal Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Metal Packaging and Crown Holdings 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 Crown Holdings are associated (or correlated) with Ardagh Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Metal Packaging has no effect on the direction of Crown Holdings i.e., Crown Holdings and Ardagh Metal go up and down completely randomly.
Pair Corralation between Crown Holdings and Ardagh Metal
Considering the 90-day investment horizon Crown Holdings is expected to under-perform the Ardagh Metal. But the stock apears to be less risky and, when comparing its historical volatility, Crown Holdings is 1.11 times less risky than Ardagh Metal. The stock trades about -0.1 of its potential returns per unit of risk. The Ardagh Metal Packaging is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 366.00 in Ardagh Metal Packaging on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Ardagh Metal Packaging or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Holdings vs. Ardagh Metal Packaging
Performance |
| Timeline |
| Crown Holdings |
| Ardagh Metal Packaging |
Crown Holdings and Ardagh Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Holdings and Ardagh Metal
The main advantage of trading using opposite Crown Holdings and Ardagh Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Holdings position performs unexpectedly, Ardagh Metal 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 Ardagh Metal will offset losses from the drop in Ardagh Metal's long position.| Crown Holdings vs. AptarGroup | Crown Holdings vs. Sonoco Products | Crown Holdings vs. Graphic Packaging Holding |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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