Correlation Between Packagingof America and Smurfit Kappa
Can any of the company-specific risk be diversified away by investing in both Packagingof America and Smurfit Kappa 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 Packagingof America and Smurfit Kappa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packaging of and Smurfit Kappa Group, you can compare the effects of market volatilities on Packagingof America and Smurfit Kappa 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 Packagingof America with a short position of Smurfit Kappa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packagingof America and Smurfit Kappa.
Diversification Opportunities for Packagingof America and Smurfit Kappa
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Packagingof and Smurfit is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Packaging of and Smurfit Kappa Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit Kappa Group and Packagingof America 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 Packaging of are associated (or correlated) with Smurfit Kappa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit Kappa Group has no effect on the direction of Packagingof America i.e., Packagingof America and Smurfit Kappa go up and down completely randomly.
Pair Corralation between Packagingof America and Smurfit Kappa
Assuming the 90 days horizon Packaging of is expected to under-perform the Smurfit Kappa. But the stock apears to be less risky and, when comparing its historical volatility, Packaging of is 1.03 times less risky than Smurfit Kappa. The stock trades about -0.25 of its potential returns per unit of risk. The Smurfit Kappa Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 5,226 in Smurfit Kappa Group on November 27, 2024 and sell it today you would lose (136.00) from holding Smurfit Kappa Group or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packaging of vs. Smurfit Kappa Group
Performance |
| Timeline |
| Packagingof America |
| Smurfit Kappa Group |
Packagingof America and Smurfit Kappa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packagingof America and Smurfit Kappa
The main advantage of trading using opposite Packagingof America and Smurfit Kappa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packagingof America position performs unexpectedly, Smurfit Kappa 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 Smurfit Kappa will offset losses from the drop in Smurfit Kappa's long position.| Packagingof America vs. TRADEGATE | Packagingof America vs. RETAIL FOOD GROUP | Packagingof America vs. Japan Medical Dynamic | Packagingof America vs. Tradegate AG Wertpapierhandelsbank |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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