Correlation Between SEALED AIR and Mohawk Industries
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and Mohawk Industries 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 Mohawk Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and Mohawk Industries, you can compare the effects of market volatilities on SEALED AIR and Mohawk Industries 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 Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Mohawk Industries.
Diversification Opportunities for SEALED AIR and Mohawk Industries
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SEALED and Mohawk is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk Industries 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 Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of SEALED AIR i.e., SEALED AIR and Mohawk Industries go up and down completely randomly.
Pair Corralation between SEALED AIR and Mohawk Industries
Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the Mohawk Industries. But the stock apears to be less risky and, when comparing its historical volatility, SEALED AIR is 1.2 times less risky than Mohawk Industries. The stock trades about -0.02 of its potential returns per unit of risk. The Mohawk Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,400 in Mohawk Industries on September 5, 2024 and sell it today you would earn a total of 3,400 from holding Mohawk Industries or generate 36.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SEALED AIR vs. Mohawk Industries
Performance |
| Timeline |
| SEALED AIR |
| Mohawk Industries |
SEALED AIR and Mohawk Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Mohawk Industries
The main advantage of trading using opposite SEALED AIR and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, Mohawk Industries 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.| SEALED AIR vs. TOTAL GABON | SEALED AIR vs. Walgreens Boots Alliance | SEALED AIR vs. Peak Resources Limited |
| Mohawk Industries vs. Westinghouse Air Brake | Mohawk Industries vs. SHIP HEALTHCARE HLDGINC | Mohawk Industries vs. SEALED AIR | Mohawk Industries vs. GUARDANT HEALTH CL |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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