Correlation Between Packaging and Vidrala SA
Can any of the company-specific risk be diversified away by investing in both Packaging and Vidrala SA 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 Packaging and Vidrala SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packaging of and Vidrala SA, you can compare the effects of market volatilities on Packaging and Vidrala SA 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 Packaging with a short position of Vidrala SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packaging and Vidrala SA.
Diversification Opportunities for Packaging and Vidrala SA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Packaging and Vidrala is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Packaging of and Vidrala SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vidrala SA and Packaging 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 Vidrala SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vidrala SA has no effect on the direction of Packaging i.e., Packaging and Vidrala SA go up and down completely randomly.
Pair Corralation between Packaging and Vidrala SA
Assuming the 90 days horizon Packaging of is expected to generate 0.76 times more return on investment than Vidrala SA. However, Packaging of is 1.31 times less risky than Vidrala SA. It trades about 0.16 of its potential returns per unit of risk. Vidrala SA is currently generating about 0.08 per unit of risk. If you would invest 13,473 in Packaging of on September 15, 2024 and sell it today you would earn a total of 9,117 from holding Packaging of or generate 67.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packaging of vs. Vidrala SA
Performance |
| Timeline |
| Packaging |
| Vidrala SA |
Packaging and Vidrala SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packaging and Vidrala SA
The main advantage of trading using opposite Packaging and Vidrala SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packaging position performs unexpectedly, Vidrala SA 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 Vidrala SA will offset losses from the drop in Vidrala SA's long position.| Packaging vs. CeoTronics AG | Packaging vs. Webster Financial | Packaging vs. OAKTRSPECLENDNEW | Packaging vs. AGF Management Limited |
| Vidrala SA vs. Packaging of | Vidrala SA vs. Graphic Packaging Holding | Vidrala SA vs. Superior Plus Corp | Vidrala SA vs. SIVERS SEMICONDUCTORS AB |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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