Correlation Between Sealed Air and Digi International
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Digi International 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 Digi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Digi International, you can compare the effects of market volatilities on Sealed Air and Digi International 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 Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Digi International.
Diversification Opportunities for Sealed Air and Digi International
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and Digi is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Sealed Air i.e., Sealed Air and Digi International go up and down completely randomly.
Pair Corralation between Sealed Air and Digi International
Considering the 90-day investment horizon Sealed Air is expected to under-perform the Digi International. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 1.29 times less risky than Digi International. The stock trades about -0.01 of its potential returns per unit of risk. The Digi International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,711 in Digi International on September 12, 2024 and sell it today you would lose (364.50) from holding Digi International or give up 9.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sealed Air vs. Digi International
Performance |
| Timeline |
| Sealed Air |
| Digi International |
Sealed Air and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Digi International
The main advantage of trading using opposite Sealed Air and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Digi International 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 Digi International will offset losses from the drop in Digi International'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 |
| Digi International vs. Victory Integrity Smallmid Cap | Digi International vs. Hilton Worldwide Holdings | Digi International vs. NVIDIA | Digi International vs. JPMorgan Chase Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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