Correlation Between Sealed Air and Eastern
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Eastern 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 Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Eastern Co, you can compare the effects of market volatilities on Sealed Air and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Eastern.
Diversification Opportunities for Sealed Air and Eastern
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sealed and Eastern is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Sealed Air i.e., Sealed Air and Eastern go up and down completely randomly.
Pair Corralation between Sealed Air and Eastern
Considering the 90-day investment horizon Sealed Air is expected to generate 4.85 times less return on investment than Eastern. But when comparing it to its historical volatility, Sealed Air is 1.34 times less risky than Eastern. It trades about 0.05 of its potential returns per unit of risk. Eastern Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,714 in Eastern Co on September 12, 2024 and sell it today you would earn a total of 183.00 from holding Eastern Co or generate 6.74% 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. Eastern Co
Performance |
| Timeline |
| Sealed Air |
| Eastern |
Sealed Air and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Eastern
The main advantage of trading using opposite Sealed Air and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern'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 |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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