Correlation Between SEALED AIR and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and BROADWIND ENRGY 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 BROADWIND ENRGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and BROADWIND ENRGY, you can compare the effects of market volatilities on SEALED AIR and BROADWIND ENRGY 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 BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and BROADWIND ENRGY.
Diversification Opportunities for SEALED AIR and BROADWIND ENRGY
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SEALED and BROADWIND is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY 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 BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of SEALED AIR i.e., SEALED AIR and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between SEALED AIR and BROADWIND ENRGY
Assuming the 90 days trading horizon SEALED AIR is expected to generate 3.43 times less return on investment than BROADWIND ENRGY. But when comparing it to its historical volatility, SEALED AIR is 4.03 times less risky than BROADWIND ENRGY. It trades about 0.22 of its potential returns per unit of risk. BROADWIND ENRGY is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 171.00 in BROADWIND ENRGY on October 24, 2024 and sell it today you would earn a total of 21.00 from holding BROADWIND ENRGY or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. BROADWIND ENRGY
Performance |
| Timeline |
| SEALED AIR |
| BROADWIND ENRGY |
SEALED AIR and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and BROADWIND ENRGY
The main advantage of trading using opposite SEALED AIR and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.| SEALED AIR vs. MOLSON RS BEVERAGE | SEALED AIR vs. CAIRN HOMES EO | SEALED AIR vs. Hisense Home Appliances | SEALED AIR vs. Commercial Vehicle Group |
| BROADWIND ENRGY vs. SEALED AIR | BROADWIND ENRGY vs. Alaska Air Group | BROADWIND ENRGY vs. Delta Air Lines | BROADWIND ENRGY vs. CarsalesCom |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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