Correlation Between Imaflex and Reynolds Consumer
Can any of the company-specific risk be diversified away by investing in both Imaflex and Reynolds Consumer 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 Imaflex and Reynolds Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imaflex and Reynolds Consumer Products, you can compare the effects of market volatilities on Imaflex and Reynolds Consumer 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 Imaflex with a short position of Reynolds Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imaflex and Reynolds Consumer.
Diversification Opportunities for Imaflex and Reynolds Consumer
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Imaflex and Reynolds is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Imaflex and Reynolds Consumer Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reynolds Consumer and Imaflex 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 Imaflex are associated (or correlated) with Reynolds Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reynolds Consumer has no effect on the direction of Imaflex i.e., Imaflex and Reynolds Consumer go up and down completely randomly.
Pair Corralation between Imaflex and Reynolds Consumer
Assuming the 90 days horizon Imaflex is expected to generate 2.38 times more return on investment than Reynolds Consumer. However, Imaflex is 2.38 times more volatile than Reynolds Consumer Products. It trades about 0.06 of its potential returns per unit of risk. Reynolds Consumer Products is currently generating about -0.01 per unit of risk. If you would invest 68.00 in Imaflex on November 26, 2024 and sell it today you would earn a total of 32.00 from holding Imaflex or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.53% |
| Values | Daily Returns |
Imaflex vs. Reynolds Consumer Products
Performance |
| Timeline |
| Imaflex |
| Reynolds Consumer |
Imaflex and Reynolds Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imaflex and Reynolds Consumer
The main advantage of trading using opposite Imaflex and Reynolds Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imaflex position performs unexpectedly, Reynolds Consumer 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 Reynolds Consumer will offset losses from the drop in Reynolds Consumer's long position.| Imaflex vs. Karat Packaging | Imaflex vs. NEXE Innovations | Imaflex vs. DSS Inc | Imaflex vs. Silgan Holdings |
| Reynolds Consumer vs. Greif Bros | Reynolds Consumer vs. Karat Packaging | Reynolds Consumer vs. Silgan Holdings | Reynolds Consumer vs. O I Glass |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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