Correlation Between Graphic Packaging and Allison Transmission
Can any of the company-specific risk be diversified away by investing in both Graphic Packaging and Allison Transmission 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 Graphic Packaging and Allison Transmission into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphic Packaging Holding and Allison Transmission Holdings, you can compare the effects of market volatilities on Graphic Packaging and Allison Transmission 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 Graphic Packaging with a short position of Allison Transmission. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphic Packaging and Allison Transmission.
Diversification Opportunities for Graphic Packaging and Allison Transmission
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Graphic and Allison is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Allison Transmission Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allison Transmission and Graphic Packaging 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 Graphic Packaging Holding are associated (or correlated) with Allison Transmission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allison Transmission has no effect on the direction of Graphic Packaging i.e., Graphic Packaging and Allison Transmission go up and down completely randomly.
Pair Corralation between Graphic Packaging and Allison Transmission
Considering the 90-day investment horizon Graphic Packaging is expected to generate 3.74 times less return on investment than Allison Transmission. But when comparing it to its historical volatility, Graphic Packaging Holding is 2.05 times less risky than Allison Transmission. It trades about 0.18 of its potential returns per unit of risk. Allison Transmission Holdings is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 9,993 in Allison Transmission Holdings on August 30, 2024 and sell it today you would earn a total of 1,865 from holding Allison Transmission Holdings or generate 18.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graphic Packaging Holding vs. Allison Transmission Holdings
Performance |
| Timeline |
| Graphic Packaging Holding |
| Allison Transmission |
Graphic Packaging and Allison Transmission Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphic Packaging and Allison Transmission
The main advantage of trading using opposite Graphic Packaging and Allison Transmission positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphic Packaging position performs unexpectedly, Allison Transmission 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 Allison Transmission will offset losses from the drop in Allison Transmission's long position.| Graphic Packaging vs. Ball Corporation | Graphic Packaging vs. Silgan Holdings | Graphic Packaging vs. Sonoco Products | Graphic Packaging vs. Reynolds Consumer Products |
| Allison Transmission vs. Gentex | Allison Transmission vs. Adient PLC | Allison Transmission vs. Autoliv | Allison Transmission vs. Fox Factory 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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