Correlation Between Sealed Air and Fortive Corp
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Fortive Corp 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 Fortive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Fortive Corp, you can compare the effects of market volatilities on Sealed Air and Fortive Corp 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 Fortive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Fortive Corp.
Diversification Opportunities for Sealed Air and Fortive Corp
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and Fortive is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Fortive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive Corp 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 Fortive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive Corp has no effect on the direction of Sealed Air i.e., Sealed Air and Fortive Corp go up and down completely randomly.
Pair Corralation between Sealed Air and Fortive Corp
Considering the 90-day investment horizon Sealed Air is expected to generate 4.1 times less return on investment than Fortive Corp. In addition to that, Sealed Air is 1.5 times more volatile than Fortive Corp. It trades about 0.01 of its total potential returns per unit of risk. Fortive Corp is currently generating about 0.04 per unit of volatility. If you would invest 6,805 in Fortive Corp on August 31, 2024 and sell it today you would earn a total of 1,128 from holding Fortive Corp or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sealed Air vs. Fortive Corp
Performance |
| Timeline |
| Sealed Air |
| Fortive Corp |
Sealed Air and Fortive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Fortive Corp
The main advantage of trading using opposite Sealed Air and Fortive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Fortive Corp 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 Fortive Corp will offset losses from the drop in Fortive Corp'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 |
| Fortive Corp vs. Vishay Precision Group | Fortive Corp vs. Sensata Technologies Holding | Fortive Corp vs. Badger Meter | Fortive Corp vs. Trimble |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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