Correlation Between Sealed Air and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Bowhead Specialty 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 Bowhead Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Bowhead Specialty Holdings, you can compare the effects of market volatilities on Sealed Air and Bowhead Specialty 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 Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Bowhead Specialty.
Diversification Opportunities for Sealed Air and Bowhead Specialty
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sealed and Bowhead is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty 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 Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of Sealed Air i.e., Sealed Air and Bowhead Specialty go up and down completely randomly.
Pair Corralation between Sealed Air and Bowhead Specialty
Considering the 90-day investment horizon Sealed Air is expected to under-perform the Bowhead Specialty. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 1.1 times less risky than Bowhead Specialty. The stock trades about -0.01 of its potential returns per unit of risk. The Bowhead Specialty Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Bowhead Specialty Holdings on November 1, 2024 and sell it today you would earn a total of 903.00 from holding Bowhead Specialty Holdings or generate 37.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 36.29% |
| Values | Daily Returns |
Sealed Air vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| Sealed Air |
| Bowhead Specialty |
Sealed Air and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Bowhead Specialty
The main advantage of trading using opposite Sealed Air and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Bowhead Specialty 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 Bowhead Specialty will offset losses from the drop in Bowhead Specialty's long position.| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
| Bowhead Specialty vs. Sealed Air | Bowhead Specialty vs. Northstar Clean Technologies | Bowhead Specialty vs. China Clean Energy | Bowhead Specialty vs. Luxfer Holdings PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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