Correlation Between GMO Internet and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and SEALED AIR , you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and SEALED AIR.
Diversification Opportunities for GMO Internet and SEALED AIR
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GMO and SEALED is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and GMO Internet 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 GMO Internet 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 has no effect on the direction of GMO Internet i.e., GMO Internet and SEALED AIR go up and down completely randomly.
Pair Corralation between GMO Internet and SEALED AIR
Assuming the 90 days horizon GMO Internet is expected to generate 3.37 times less return on investment than SEALED AIR. In addition to that, GMO Internet is 1.24 times more volatile than SEALED AIR . It trades about 0.03 of its total potential returns per unit of risk. SEALED AIR is currently generating about 0.14 per unit of volatility. If you would invest 3,260 in SEALED AIR on October 28, 2024 and sell it today you would earn a total of 80.00 from holding SEALED AIR or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. SEALED AIR
Performance |
| Timeline |
| GMO Internet |
| SEALED AIR |
GMO Internet and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and SEALED AIR
The main advantage of trading using opposite GMO Internet and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. Fevertree Drinks PLC | GMO Internet vs. ANGLO ASIAN MINING | GMO Internet vs. De Grey Mining | GMO Internet vs. MOLSON RS BEVERAGE |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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