Correlation Between Caledonia Mining and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining 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 Caledonia Mining and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Sealed Air Corp, you can compare the effects of market volatilities on Caledonia Mining 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 Caledonia Mining with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Sealed Air.
Diversification Opportunities for Caledonia Mining and Sealed Air
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Caledonia and Sealed is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining i.e., Caledonia Mining and Sealed Air go up and down completely randomly.
Pair Corralation between Caledonia Mining and Sealed Air
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 1.02 times more return on investment than Sealed Air. However, Caledonia Mining is 1.02 times more volatile than Sealed Air Corp. It trades about 0.04 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 78,798 in Caledonia Mining on September 3, 2024 and sell it today you would earn a total of 6,202 from holding Caledonia Mining or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.57% |
| Values | Daily Returns |
Caledonia Mining vs. Sealed Air Corp
Performance |
| Timeline |
| Caledonia Mining |
| Sealed Air Corp |
Caledonia Mining and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Sealed Air
The main advantage of trading using opposite Caledonia Mining and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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.The idea behind Caledonia Mining and Sealed Air Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sealed Air vs. Cembra Money Bank | Sealed Air vs. Amedeo Air Four | Sealed Air vs. Cairn Homes PLC | Sealed Air vs. Finnair Oyj |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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