Correlation Between SEALED AIR and Transport International
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and Transport International 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 Transport International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and Transport International Holdings, you can compare the effects of market volatilities on SEALED AIR and Transport International 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 Transport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Transport International.
Diversification Opportunities for SEALED AIR and Transport International
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between SEALED and Transport is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International 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 Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of SEALED AIR i.e., SEALED AIR and Transport International go up and down completely randomly.
Pair Corralation between SEALED AIR and Transport International
Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.96 times more return on investment than Transport International. However, SEALED AIR is 1.04 times less risky than Transport International. It trades about 0.0 of its potential returns per unit of risk. Transport International Holdings is currently generating about -0.05 per unit of risk. If you would invest 3,417 in SEALED AIR on October 25, 2024 and sell it today you would lose (57.00) from holding SEALED AIR or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. Transport International Holdin
Performance |
| Timeline |
| SEALED AIR |
| Transport International |
SEALED AIR and Transport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Transport International
The main advantage of trading using opposite SEALED AIR and Transport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, Transport International 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 Transport International will offset losses from the drop in Transport International's long position.The idea behind SEALED AIR and Transport International Holdings 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.| Transport International vs. Tianjin Capital Environmental | Transport International vs. Renesas Electronics | Transport International vs. Olympic Steel | Transport International vs. TT Electronics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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