Correlation Between ITALIAN WINE and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE 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 ITALIAN WINE and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and SEALED AIR , you can compare the effects of market volatilities on ITALIAN WINE 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 ITALIAN WINE with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and SEALED AIR.
Diversification Opportunities for ITALIAN WINE and SEALED AIR
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ITALIAN and SEALED is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and SEALED AIR go up and down completely randomly.
Pair Corralation between ITALIAN WINE and SEALED AIR
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to generate 0.9 times more return on investment than SEALED AIR. However, ITALIAN WINE BRANDS is 1.11 times less risky than SEALED AIR. It trades about 0.0 of its potential returns per unit of risk. SEALED AIR is currently generating about -0.04 per unit of risk. If you would invest 2,086 in ITALIAN WINE BRANDS on January 15, 2025 and sell it today you would lose (166.00) from holding ITALIAN WINE BRANDS or give up 7.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. SEALED AIR
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| SEALED AIR |
ITALIAN WINE and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and SEALED AIR
The main advantage of trading using opposite ITALIAN WINE and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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.| ITALIAN WINE vs. Science Applications International | ITALIAN WINE vs. Stewart Information Services | ITALIAN WINE vs. Nanjing Panda Electronics | ITALIAN WINE vs. Information Services International Dentsu |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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