Correlation Between Greif Bros and Crown Holdings
Can any of the company-specific risk be diversified away by investing in both Greif Bros and Crown Holdings 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 Greif Bros and Crown Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greif Bros and Crown Holdings, you can compare the effects of market volatilities on Greif Bros and Crown Holdings 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 Greif Bros with a short position of Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greif Bros and Crown Holdings.
Diversification Opportunities for Greif Bros and Crown Holdings
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Greif and Crown is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Greif Bros and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Greif Bros 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 Greif Bros are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Greif Bros i.e., Greif Bros and Crown Holdings go up and down completely randomly.
Pair Corralation between Greif Bros and Crown Holdings
Considering the 90-day investment horizon Greif Bros is expected to generate 1.47 times less return on investment than Crown Holdings. But when comparing it to its historical volatility, Greif Bros is 1.01 times less risky than Crown Holdings. It trades about 0.02 of its potential returns per unit of risk. Crown Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,886 in Crown Holdings on August 28, 2024 and sell it today you would earn a total of 1,376 from holding Crown Holdings or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greif Bros vs. Crown Holdings
Performance |
| Timeline |
| Greif Bros |
| Crown Holdings |
Greif Bros and Crown Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greif Bros and Crown Holdings
The main advantage of trading using opposite Greif Bros and Crown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greif Bros position performs unexpectedly, Crown Holdings 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 Crown Holdings will offset losses from the drop in Crown Holdings' long position.| Greif Bros vs. Silgan Holdings | Greif Bros vs. AptarGroup | Greif Bros vs. Sonoco Products | Greif Bros vs. Graphic Packaging Holding |
| Crown Holdings vs. AptarGroup | Crown Holdings vs. Sonoco Products | Crown Holdings vs. Graphic Packaging Holding |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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