Correlation Between SEALED AIR and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both SEALED AIR and Thyssenkrupp 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 Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and thyssenkrupp AG, you can compare the effects of market volatilities on SEALED AIR and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Thyssenkrupp.
Diversification Opportunities for SEALED AIR and Thyssenkrupp
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between SEALED and Thyssenkrupp is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of SEALED AIR i.e., SEALED AIR and Thyssenkrupp go up and down completely randomly.
Pair Corralation between SEALED AIR and Thyssenkrupp
Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, SEALED AIR is 3.14 times less risky than Thyssenkrupp. The stock trades about -0.02 of its potential returns per unit of risk. The thyssenkrupp AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 398.00 in thyssenkrupp AG on October 28, 2024 and sell it today you would earn a total of 28.00 from holding thyssenkrupp AG or generate 7.04% 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. thyssenkrupp AG
Performance |
| Timeline |
| SEALED AIR |
| thyssenkrupp AG |
SEALED AIR and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Thyssenkrupp
The main advantage of trading using opposite SEALED AIR and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.The idea behind SEALED AIR and thyssenkrupp AG 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.| Thyssenkrupp vs. PennantPark Investment | Thyssenkrupp vs. Sekisui Chemical Co | Thyssenkrupp vs. X FAB Silicon Foundries | Thyssenkrupp vs. Mitsui Chemicals |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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