Correlation Between Reliance Steel and Graphic Packaging
Can any of the company-specific risk be diversified away by investing in both Reliance Steel 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 Reliance Steel and Graphic Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Steel Aluminum and Graphic Packaging Holding, you can compare the effects of market volatilities on Reliance Steel 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 Reliance Steel with a short position of Graphic Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Steel and Graphic Packaging.
Diversification Opportunities for Reliance Steel and Graphic Packaging
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reliance and Graphic is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Steel Aluminum 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 Reliance Steel 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 Reliance Steel Aluminum 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 Reliance Steel i.e., Reliance Steel and Graphic Packaging go up and down completely randomly.
Pair Corralation between Reliance Steel and Graphic Packaging
Assuming the 90 days horizon Reliance Steel Aluminum is expected to under-perform the Graphic Packaging. In addition to that, Reliance Steel is 1.01 times more volatile than Graphic Packaging Holding. It trades about -0.15 of its total potential returns per unit of risk. Graphic Packaging Holding is currently generating about 0.09 per unit of volatility. If you would invest 2,726 in Graphic Packaging Holding on September 13, 2024 and sell it today you would earn a total of 59.00 from holding Graphic Packaging Holding or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Reliance Steel Aluminum vs. Graphic Packaging Holding
Performance |
| Timeline |
| Reliance Steel Aluminum |
| Graphic Packaging Holding |
Reliance Steel and Graphic Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Steel and Graphic Packaging
The main advantage of trading using opposite Reliance Steel and Graphic Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Steel 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.| Reliance Steel vs. HYATT HOTELS A | Reliance Steel vs. Host Hotels Resorts | Reliance Steel vs. Games Workshop Group | Reliance Steel vs. INTERCONT HOTELS |
| Graphic Packaging vs. DALATA HOTEL | Graphic Packaging vs. HYATT HOTELS A | Graphic Packaging vs. Carsales | Graphic Packaging vs. Choice Hotels International |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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