Correlation Between Packaging Corp and Imaflex
Can any of the company-specific risk be diversified away by investing in both Packaging Corp and Imaflex 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 Corp and Imaflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packaging Corp of and Imaflex, you can compare the effects of market volatilities on Packaging Corp and Imaflex 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 Corp with a short position of Imaflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packaging Corp and Imaflex.
Diversification Opportunities for Packaging Corp and Imaflex
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Packaging and Imaflex is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Packaging Corp of and Imaflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imaflex and Packaging Corp 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 Corp of are associated (or correlated) with Imaflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imaflex has no effect on the direction of Packaging Corp i.e., Packaging Corp and Imaflex go up and down completely randomly.
Pair Corralation between Packaging Corp and Imaflex
Considering the 90-day investment horizon Packaging Corp of is expected to generate 0.47 times more return on investment than Imaflex. However, Packaging Corp of is 2.13 times less risky than Imaflex. It trades about 0.1 of its potential returns per unit of risk. Imaflex is currently generating about 0.02 per unit of risk. If you would invest 12,753 in Packaging Corp of on August 29, 2024 and sell it today you would earn a total of 12,050 from holding Packaging Corp of or generate 94.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packaging Corp of vs. Imaflex
Performance |
| Timeline |
| Packaging Corp |
| Imaflex |
Packaging Corp and Imaflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packaging Corp and Imaflex
The main advantage of trading using opposite Packaging Corp and Imaflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packaging Corp position performs unexpectedly, Imaflex 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 Imaflex will offset losses from the drop in Imaflex's long position.| Packaging Corp vs. Avery Dennison Corp | Packaging Corp vs. O I Glass | Packaging Corp vs. Silgan Holdings | Packaging Corp vs. Sealed Air |
| Imaflex vs. Ascendant Resources | Imaflex vs. Cantex Mine Development | Imaflex vs. Amarc Resources | Imaflex vs. Sterling Metals Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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