Correlation Between WM Technology and CCL Industries
Can any of the company-specific risk be diversified away by investing in both WM Technology and CCL Industries 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 WM Technology and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WM Technology and CCL Industries, you can compare the effects of market volatilities on WM Technology and CCL Industries 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 WM Technology with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of WM Technology and CCL Industries.
Diversification Opportunities for WM Technology and CCL Industries
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAPSW and CCL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and WM Technology 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 WM Technology are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of WM Technology i.e., WM Technology and CCL Industries go up and down completely randomly.
Pair Corralation between WM Technology and CCL Industries
Assuming the 90 days horizon WM Technology is expected to generate 10.82 times more return on investment than CCL Industries. However, WM Technology is 10.82 times more volatile than CCL Industries. It trades about 0.3 of its potential returns per unit of risk. CCL Industries is currently generating about -0.22 per unit of risk. If you would invest 2.01 in WM Technology on September 1, 2024 and sell it today you would earn a total of 2.00 from holding WM Technology or generate 99.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
WM Technology vs. CCL Industries
Performance |
| Timeline |
| WM Technology |
| CCL Industries |
WM Technology and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WM Technology and CCL Industries
The main advantage of trading using opposite WM Technology and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WM Technology position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.The idea behind WM Technology and CCL Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CCL Industries vs. Myers Industries | CCL Industries vs. Silgan Holdings | CCL Industries vs. Pactiv Evergreen | CCL Industries vs. Reynolds Consumer Products |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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