Correlation Between SEALED AIR and American Public
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and American Public 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 SEALED AIR and American Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and American Public Education, you can compare the effects of market volatilities on SEALED AIR and American Public 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 SEALED AIR with a short position of American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and American Public.
Diversification Opportunities for SEALED AIR and American Public
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SEALED and American is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and American Public Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Public Education and SEALED AIR 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 SEALED AIR are associated (or correlated) with American Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Public Education has no effect on the direction of SEALED AIR i.e., SEALED AIR and American Public go up and down completely randomly.
Pair Corralation between SEALED AIR and American Public
Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the American Public. But the stock apears to be less risky and, when comparing its historical volatility, SEALED AIR is 2.51 times less risky than American Public. The stock trades about -0.03 of its potential returns per unit of risk. The American Public Education is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,110 in American Public Education on October 11, 2024 and sell it today you would earn a total of 910.00 from holding American Public Education or generate 81.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. American Public Education
Performance |
| Timeline |
| SEALED AIR |
| American Public Education |
SEALED AIR and American Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and American Public
The main advantage of trading using opposite SEALED AIR and American Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, American Public 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 American Public will offset losses from the drop in American Public's long position.| SEALED AIR vs. STRAYER EDUCATION | SEALED AIR vs. G8 EDUCATION | SEALED AIR vs. DEVRY EDUCATION GRP | SEALED AIR vs. Magnachip Semiconductor |
| American Public vs. SEALED AIR | American Public vs. Warner Music Group | American Public vs. SYSTEMAIR AB | American Public vs. RYANAIR HLDGS ADR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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