Correlation Between Sea and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Sea and Sealed Air 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 Sea and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Sealed Air, you can compare the effects of market volatilities on Sea and Sealed Air 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 Sea with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Sealed Air.
Diversification Opportunities for Sea and Sealed Air
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sea and Sealed is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air and Sea 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 Sea are associated (or correlated) with Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Sea i.e., Sea and Sealed Air go up and down completely randomly.
Pair Corralation between Sea and Sealed Air
Allowing for the 90-day total investment horizon Sea is expected to generate 1.54 times more return on investment than Sealed Air. However, Sea is 1.54 times more volatile than Sealed Air. It trades about 0.18 of its potential returns per unit of risk. Sealed Air is currently generating about 0.04 per unit of risk. If you would invest 9,395 in Sea on August 26, 2024 and sell it today you would earn a total of 1,909 from holding Sea or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sea vs. Sealed Air
Performance |
| Timeline |
| Sea |
| Sealed Air |
Sea and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Sealed Air
The main advantage of trading using opposite Sea and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
| Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Reynolds Consumer Products | Sealed Air vs. Ball Corporation |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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