Correlation Between Sealed Air and Arq
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Arq 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 Arq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Arq Inc, you can compare the effects of market volatilities on Sealed Air and Arq 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 Arq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Arq.
Diversification Opportunities for Sealed Air and Arq
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sealed and Arq is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq Inc 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 Arq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arq Inc has no effect on the direction of Sealed Air i.e., Sealed Air and Arq go up and down completely randomly.
Pair Corralation between Sealed Air and Arq
Considering the 90-day investment horizon Sealed Air is expected to under-perform the Arq. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 2.7 times less risky than Arq. The stock trades about -0.02 of its potential returns per unit of risk. The Arq Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 242.00 in Arq Inc on August 28, 2024 and sell it today you would earn a total of 517.00 from holding Arq Inc or generate 213.64% 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. Arq Inc
Performance |
| Timeline |
| Sealed Air |
| Arq Inc |
Sealed Air and Arq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Arq
The main advantage of trading using opposite Sealed Air and Arq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Arq 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 Arq will offset losses from the drop in Arq's long position.| Sealed Air vs. Sonoco Products | Sealed Air vs. Reynolds Consumer Products | Sealed Air vs. Ball Corporation | Sealed Air vs. Crown Holdings |
| Arq vs. Energy Recovery | Arq vs. Federal Signal | Arq vs. Purecycle Technologies Holdings | Arq vs. Zurn Elkay Water |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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