Correlation Between Reynolds Consumer and CCL Industries

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Reynolds Consumer 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 Reynolds Consumer and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reynolds Consumer Products and CCL Industries, you can compare the effects of market volatilities on Reynolds Consumer 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 Reynolds Consumer with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reynolds Consumer and CCL Industries.

Diversification Opportunities for Reynolds Consumer and CCL Industries

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Reynolds and CCL is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Reynolds Consumer Products and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Reynolds Consumer 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 Reynolds Consumer Products 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 Reynolds Consumer i.e., Reynolds Consumer and CCL Industries go up and down completely randomly.

Pair Corralation between Reynolds Consumer and CCL Industries

Given the investment horizon of 90 days Reynolds Consumer Products is expected to generate 0.72 times more return on investment than CCL Industries. However, Reynolds Consumer Products is 1.38 times less risky than CCL Industries. It trades about 0.05 of its potential returns per unit of risk. CCL Industries is currently generating about -0.17 per unit of risk. If you would invest  2,699  in Reynolds Consumer Products on November 1, 2024 and sell it today you would earn a total of  73.00  from holding Reynolds Consumer Products or generate 2.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Reynolds Consumer Products  vs.  CCL Industries

 Performance 
       Timeline  
Reynolds Consumer 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Reynolds Consumer Products are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Reynolds Consumer is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
CCL Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Reynolds Consumer and CCL Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Reynolds Consumer and CCL Industries

The main advantage of trading using opposite Reynolds Consumer and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reynolds Consumer 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 Reynolds Consumer Products 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.
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

Other Complementary Tools

Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format