Correlation Between Reynolds Consumer and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Reynolds Consumer and Sealed Air 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 Sealed Air 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 Sealed Air, you can compare the effects of market volatilities on Reynolds Consumer and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reynolds Consumer and Sealed Air.
Diversification Opportunities for Reynolds Consumer and Sealed Air
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Reynolds and Sealed is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Reynolds Consumer Products and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Reynolds Consumer i.e., Reynolds Consumer and Sealed Air go up and down completely randomly.
Pair Corralation between Reynolds Consumer and Sealed Air
Given the investment horizon of 90 days Reynolds Consumer Products is expected to under-perform the Sealed Air. In addition to that, Reynolds Consumer is 1.03 times more volatile than Sealed Air. It trades about -0.18 of its total potential returns per unit of risk. Sealed Air is currently generating about -0.06 per unit of volatility. If you would invest 3,666 in Sealed Air on August 27, 2024 and sell it today you would lose (76.00) from holding Sealed Air or give up 2.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reynolds Consumer Products vs. Sealed Air
Performance |
| Timeline |
| Reynolds Consumer |
| Sealed Air |
Reynolds Consumer and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reynolds Consumer and Sealed Air
The main advantage of trading using opposite Reynolds Consumer and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reynolds Consumer position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.| Reynolds Consumer vs. Greif Bros | Reynolds Consumer vs. Karat Packaging | Reynolds Consumer vs. Silgan Holdings | Reynolds Consumer vs. O I Glass |
| Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Reynolds Consumer Products | Sealed Air 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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