Correlation Between SEALED AIR and Dave Busters
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and Dave Busters 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 Dave Busters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and Dave Busters Entertainment, you can compare the effects of market volatilities on SEALED AIR and Dave Busters 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 Dave Busters. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Dave Busters.
Diversification Opportunities for SEALED AIR and Dave Busters
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SEALED and Dave is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta 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 Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of SEALED AIR i.e., SEALED AIR and Dave Busters go up and down completely randomly.
Pair Corralation between SEALED AIR and Dave Busters
Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.32 times more return on investment than Dave Busters. However, SEALED AIR is 3.16 times less risky than Dave Busters. It trades about -0.03 of its potential returns per unit of risk. Dave Busters Entertainment is currently generating about -0.2 per unit of risk. If you would invest 3,281 in SEALED AIR on September 22, 2024 and sell it today you would lose (41.00) from holding SEALED AIR or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. Dave Busters Entertainment
Performance |
| Timeline |
| SEALED AIR |
| Dave Busters Enterta |
SEALED AIR and Dave Busters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Dave Busters
The main advantage of trading using opposite SEALED AIR and Dave Busters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, Dave Busters 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 Dave Busters will offset losses from the drop in Dave Busters' long position.The idea behind SEALED AIR and Dave Busters Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dave Busters vs. Norwegian Air Shuttle | Dave Busters vs. ALTAIR RES INC | Dave Busters vs. MYFAIR GOLD P | Dave Busters vs. SEALED AIR |
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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