Correlation Between Reynolds Consumer and CCL Industries
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
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Reynolds and CCL is 0.31. 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 under-perform the CCL Industries. But the stock apears to be less risky and, when comparing its historical volatility, Reynolds Consumer Products is 1.66 times less risky than CCL Industries. The stock trades about 0.0 of its potential returns per unit of risk. The CCL Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,296 in CCL Industries on August 30, 2024 and sell it today you would earn a total of 1,156 from holding CCL Industries or generate 26.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.11% |
| Values | Daily Returns |
Reynolds Consumer Products vs. CCL Industries
Performance |
| Timeline |
| Reynolds Consumer |
| CCL Industries |
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.| Reynolds Consumer vs. Greif Bros | Reynolds Consumer vs. Karat Packaging | Reynolds Consumer vs. Silgan Holdings | Reynolds Consumer vs. O I Glass |
| CCL Industries vs. Myers Industries | CCL Industries vs. Silgan Holdings | CCL Industries vs. Pactiv Evergreen | CCL Industries vs. Reynolds Consumer Products |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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