Correlation Between International Paper and Graphic Packaging
Can any of the company-specific risk be diversified away by investing in both International Paper and Graphic Packaging 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 International Paper and Graphic Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Graphic Packaging Holding, you can compare the effects of market volatilities on International Paper and Graphic Packaging 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 International Paper with a short position of Graphic Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Graphic Packaging.
Diversification Opportunities for International Paper and Graphic Packaging
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Graphic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding and International Paper 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 International Paper are associated (or correlated) with Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of International Paper i.e., International Paper and Graphic Packaging go up and down completely randomly.
Pair Corralation between International Paper and Graphic Packaging
Allowing for the 90-day total investment horizon International Paper is expected to generate 1.83 times more return on investment than Graphic Packaging. However, International Paper is 1.83 times more volatile than Graphic Packaging Holding. It trades about 0.33 of its potential returns per unit of risk. Graphic Packaging Holding is currently generating about -0.06 per unit of risk. If you would invest 4,825 in International Paper on August 27, 2024 and sell it today you would earn a total of 1,132 from holding International Paper or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Paper vs. Graphic Packaging Holding
Performance |
| Timeline |
| International Paper |
| Graphic Packaging Holding |
International Paper and Graphic Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Paper and Graphic Packaging
The main advantage of trading using opposite International Paper and Graphic Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Graphic Packaging 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 Graphic Packaging will offset losses from the drop in Graphic Packaging's long position.| International Paper vs. Sealed Air | International Paper vs. Avery Dennison Corp | International Paper vs. Sonoco Products | International Paper vs. Ball Corporation |
| Graphic Packaging vs. International Paper | Graphic Packaging vs. Sonoco Products | Graphic Packaging vs. Reynolds Consumer Products | Graphic Packaging vs. Ball Corporation |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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