Correlation Between Reynolds Consumer and Graphic Packaging
Can any of the company-specific risk be diversified away by investing in both Reynolds Consumer and Graphic Packaging 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 Graphic Packaging 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 Graphic Packaging Holding, you can compare the effects of market volatilities on Reynolds Consumer and Graphic Packaging 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 Graphic Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reynolds Consumer and Graphic Packaging.
Diversification Opportunities for Reynolds Consumer and Graphic Packaging
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reynolds and Graphic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Reynolds Consumer Products and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding 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 Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of Reynolds Consumer i.e., Reynolds Consumer and Graphic Packaging go up and down completely randomly.
Pair Corralation between Reynolds Consumer and Graphic Packaging
Given the investment horizon of 90 days Reynolds Consumer Products is expected to under-perform the Graphic Packaging. But the stock apears to be less risky and, when comparing its historical volatility, Reynolds Consumer Products is 1.08 times less risky than Graphic Packaging. The stock trades about -0.16 of its potential returns per unit of risk. The Graphic Packaging Holding is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,035 in Graphic Packaging Holding on August 27, 2024 and sell it today you would lose (75.00) from holding Graphic Packaging Holding or give up 2.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reynolds Consumer Products vs. Graphic Packaging Holding
Performance |
| Timeline |
| Reynolds Consumer |
| Graphic Packaging Holding |
Reynolds Consumer and Graphic Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reynolds Consumer and Graphic Packaging
The main advantage of trading using opposite Reynolds Consumer and Graphic Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reynolds Consumer position performs unexpectedly, Graphic Packaging 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 Graphic Packaging will offset losses from the drop in Graphic Packaging's long position.| Reynolds Consumer vs. Greif Bros | Reynolds Consumer vs. Karat Packaging | Reynolds Consumer vs. Silgan Holdings | Reynolds Consumer vs. O I Glass |
| Graphic Packaging vs. International Paper | Graphic Packaging vs. Sonoco Products | Graphic Packaging vs. Reynolds Consumer Products | Graphic Packaging vs. Ball Corporation |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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