Correlation Between SEALED AIR and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and STORE ELECTRONIC 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 STORE ELECTRONIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and STORE ELECTRONIC, you can compare the effects of market volatilities on SEALED AIR and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and STORE ELECTRONIC.
Diversification Opportunities for SEALED AIR and STORE ELECTRONIC
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SEALED and STORE is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of SEALED AIR i.e., SEALED AIR and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between SEALED AIR and STORE ELECTRONIC
Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the STORE ELECTRONIC. But the stock apears to be less risky and, when comparing its historical volatility, SEALED AIR is 3.53 times less risky than STORE ELECTRONIC. The stock trades about -0.31 of its potential returns per unit of risk. The STORE ELECTRONIC is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 13,450 in STORE ELECTRONIC on October 11, 2024 and sell it today you would earn a total of 3,170 from holding STORE ELECTRONIC or generate 23.57% 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. STORE ELECTRONIC
Performance |
| Timeline |
| SEALED AIR |
| STORE ELECTRONIC |
SEALED AIR and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and STORE ELECTRONIC
The main advantage of trading using opposite SEALED AIR and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC'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 |
| STORE ELECTRONIC vs. Canon Marketing Japan | STORE ELECTRONIC vs. BJs Wholesale Club | STORE ELECTRONIC vs. SIDETRADE EO 1 | STORE ELECTRONIC vs. FAST RETAIL ADR |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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