Correlation Between SEALED AIR and CDL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and CDL INVESTMENT 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 CDL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and CDL INVESTMENT, you can compare the effects of market volatilities on SEALED AIR and CDL INVESTMENT 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 CDL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and CDL INVESTMENT.
Diversification Opportunities for SEALED AIR and CDL INVESTMENT
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SEALED and CDL is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT 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 CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of SEALED AIR i.e., SEALED AIR and CDL INVESTMENT go up and down completely randomly.
Pair Corralation between SEALED AIR and CDL INVESTMENT
Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.58 times more return on investment than CDL INVESTMENT. However, SEALED AIR is 1.73 times less risky than CDL INVESTMENT. It trades about -0.31 of its potential returns per unit of risk. CDL INVESTMENT is currently generating about -0.19 per unit of risk. If you would invest 3,500 in SEALED AIR on October 11, 2024 and sell it today you would lose (220.00) from holding SEALED AIR or give up 6.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. CDL INVESTMENT
Performance |
| Timeline |
| SEALED AIR |
| CDL INVESTMENT |
SEALED AIR and CDL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and CDL INVESTMENT
The main advantage of trading using opposite SEALED AIR and CDL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, CDL INVESTMENT 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 CDL INVESTMENT will offset losses from the drop in CDL INVESTMENT's long position.| SEALED AIR vs. Tower Semiconductor | SEALED AIR vs. Hua Hong Semiconductor | SEALED AIR vs. Aegean Airlines SA | SEALED AIR vs. Elmos Semiconductor SE |
| CDL INVESTMENT vs. SOGECLAIR SA INH | CDL INVESTMENT vs. ScanSource | CDL INVESTMENT vs. SEALED AIR | CDL INVESTMENT vs. Pentair plc |
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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