Correlation Between SEALED AIR and Canon
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and Canon 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 Canon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and Canon Inc, you can compare the effects of market volatilities on SEALED AIR and Canon 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 Canon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Canon.
Diversification Opportunities for SEALED AIR and Canon
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SEALED and Canon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc 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 Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of SEALED AIR i.e., SEALED AIR and Canon go up and down completely randomly.
Pair Corralation between SEALED AIR and Canon
Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the Canon. In addition to that, SEALED AIR is 1.07 times more volatile than Canon Inc. It trades about -0.02 of its total potential returns per unit of risk. Canon Inc is currently generating about 0.05 per unit of volatility. If you would invest 2,114 in Canon Inc on September 3, 2024 and sell it today you would earn a total of 936.00 from holding Canon Inc or generate 44.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. Canon Inc
Performance |
| Timeline |
| SEALED AIR |
| Canon Inc |
SEALED AIR and Canon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Canon
The main advantage of trading using opposite SEALED AIR and Canon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, Canon 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 Canon will offset losses from the drop in Canon's long position.| SEALED AIR vs. KIMBALL ELECTRONICS | SEALED AIR vs. SMA Solar Technology | SEALED AIR vs. Align Technology | SEALED AIR vs. Vishay Intertechnology |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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