Correlation Between Sealed Air and Black Hills
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Black Hills 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 Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Black Hills, you can compare the effects of market volatilities on Sealed Air and Black Hills 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 Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Black Hills.
Diversification Opportunities for Sealed Air and Black Hills
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sealed and Black is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Sealed Air i.e., Sealed Air and Black Hills go up and down completely randomly.
Pair Corralation between Sealed Air and Black Hills
Considering the 90-day investment horizon Sealed Air is expected to under-perform the Black Hills. In addition to that, Sealed Air is 1.54 times more volatile than Black Hills. It trades about -0.02 of its total potential returns per unit of risk. Black Hills is currently generating about 0.11 per unit of volatility. If you would invest 5,513 in Black Hills on September 1, 2024 and sell it today you would earn a total of 894.00 from holding Black Hills or generate 16.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sealed Air vs. Black Hills
Performance |
| Timeline |
| Sealed Air |
| Black Hills |
Sealed Air and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Black Hills
The main advantage of trading using opposite Sealed Air and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| Sealed Air vs. Packaging Corp of | Sealed Air vs. O I Glass | Sealed Air vs. Silgan Holdings | Sealed Air vs. International Paper |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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