Correlation Between Sealed Air and Hitachi Metals
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Hitachi Metals 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 Hitachi Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Hitachi Metals, you can compare the effects of market volatilities on Sealed Air and Hitachi Metals 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 Hitachi Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Hitachi Metals.
Diversification Opportunities for Sealed Air and Hitachi Metals
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sealed and Hitachi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Hitachi Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitachi Metals 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 Hitachi Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitachi Metals has no effect on the direction of Sealed Air i.e., Sealed Air and Hitachi Metals go up and down completely randomly.
Pair Corralation between Sealed Air and Hitachi Metals
Considering the 90-day investment horizon Sealed Air is expected to generate 0.2 times more return on investment than Hitachi Metals. However, Sealed Air is 4.89 times less risky than Hitachi Metals. It trades about -0.03 of its potential returns per unit of risk. Hitachi Metals is currently generating about -0.12 per unit of risk. If you would invest 5,164 in Sealed Air on October 27, 2024 and sell it today you would lose (1,620) from holding Sealed Air or give up 31.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 13.56% |
| Values | Daily Returns |
Sealed Air vs. Hitachi Metals
Performance |
| Timeline |
| Sealed Air |
| Hitachi Metals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sealed Air and Hitachi Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Hitachi Metals
The main advantage of trading using opposite Sealed Air and Hitachi Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Hitachi Metals 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 Hitachi Metals will offset losses from the drop in Hitachi Metals' long position.| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
| Hitachi Metals vs. Primo Brands | Hitachi Metals vs. Sysco | Hitachi Metals vs. SunOpta | Hitachi Metals vs. WK Kellogg 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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