Correlation Between Litigation Capital and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Litigation Capital 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 Litigation Capital and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and Sealed Air Corp, you can compare the effects of market volatilities on Litigation Capital 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 Litigation Capital with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Sealed Air.
Diversification Opportunities for Litigation Capital and Sealed Air
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Litigation and Sealed is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp and Litigation Capital 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 Litigation Capital Management 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 Corp has no effect on the direction of Litigation Capital i.e., Litigation Capital and Sealed Air go up and down completely randomly.
Pair Corralation between Litigation Capital and Sealed Air
Assuming the 90 days trading horizon Litigation Capital Management is expected to under-perform the Sealed Air. In addition to that, Litigation Capital is 1.28 times more volatile than Sealed Air Corp. It trades about -0.34 of its total potential returns per unit of risk. Sealed Air Corp is currently generating about 0.02 per unit of volatility. If you would invest 3,487 in Sealed Air Corp on September 20, 2024 and sell it today you would earn a total of 11.00 from holding Sealed Air Corp or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Litigation Capital Management vs. Sealed Air Corp
Performance |
| Timeline |
| Litigation Capital |
| Sealed Air Corp |
Litigation Capital and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Sealed Air
The main advantage of trading using opposite Litigation Capital and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital 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.| Litigation Capital vs. Southern Copper Corp | Litigation Capital vs. URU Metals | Litigation Capital vs. Panther Metals PLC | Litigation Capital vs. Wheaton Precious Metals |
| Sealed Air vs. Zoom Video Communications | Sealed Air vs. Gruppo MutuiOnline SpA | Sealed Air vs. Universal Display Corp | Sealed Air vs. International Biotechnology Trust |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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