Correlation Between Crown Holdings and AptarGroup
Can any of the company-specific risk be diversified away by investing in both Crown Holdings and AptarGroup 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 AptarGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Holdings and AptarGroup, you can compare the effects of market volatilities on Crown Holdings and AptarGroup 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 AptarGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Holdings and AptarGroup.
Diversification Opportunities for Crown Holdings and AptarGroup
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Crown and AptarGroup is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup 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 AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Crown Holdings i.e., Crown Holdings and AptarGroup go up and down completely randomly.
Pair Corralation between Crown Holdings and AptarGroup
Considering the 90-day investment horizon Crown Holdings is expected to under-perform the AptarGroup. But the stock apears to be less risky and, when comparing its historical volatility, Crown Holdings is 1.14 times less risky than AptarGroup. The stock trades about -0.1 of its potential returns per unit of risk. The AptarGroup is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16,910 in AptarGroup on August 27, 2024 and sell it today you would earn a total of 340.00 from holding AptarGroup or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Holdings vs. AptarGroup
Performance |
| Timeline |
| Crown Holdings |
| AptarGroup |
Crown Holdings and AptarGroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Holdings and AptarGroup
The main advantage of trading using opposite Crown Holdings and AptarGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Holdings position performs unexpectedly, AptarGroup 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 AptarGroup will offset losses from the drop in AptarGroup'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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