Correlation Between Fair Oaks and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Fair Oaks 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 Fair Oaks and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and Sealed Air Corp, you can compare the effects of market volatilities on Fair Oaks 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 Fair Oaks with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Sealed Air.
Diversification Opportunities for Fair Oaks and Sealed Air
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fair and Sealed is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income 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 Fair Oaks 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 Fair Oaks Income 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 Fair Oaks i.e., Fair Oaks and Sealed Air go up and down completely randomly.
Pair Corralation between Fair Oaks and Sealed Air
Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.71 times more return on investment than Sealed Air. However, Fair Oaks Income is 1.41 times less risky than Sealed Air. It trades about 0.22 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 55.00 in Fair Oaks Income on August 27, 2024 and sell it today you would earn a total of 2.00 from holding Fair Oaks Income or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fair Oaks Income vs. Sealed Air Corp
Performance |
| Timeline |
| Fair Oaks Income |
| Sealed Air Corp |
Fair Oaks and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and Sealed Air
The main advantage of trading using opposite Fair Oaks and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks 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.| Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Yum Brands | Fair Oaks vs. Cognizant Technology Solutions |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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