Correlation Between Sealed Air and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Lifeway Foods 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 Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Lifeway Foods, you can compare the effects of market volatilities on Sealed Air and Lifeway Foods 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 Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Lifeway Foods.
Diversification Opportunities for Sealed Air and Lifeway Foods
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and Lifeway is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway Foods 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Sealed Air i.e., Sealed Air and Lifeway Foods go up and down completely randomly.
Pair Corralation between Sealed Air and Lifeway Foods
Considering the 90-day investment horizon Sealed Air is expected to generate 0.85 times more return on investment than Lifeway Foods. However, Sealed Air is 1.18 times less risky than Lifeway Foods. It trades about 0.16 of its potential returns per unit of risk. Lifeway Foods is currently generating about -0.21 per unit of risk. If you would invest 3,383 in Sealed Air on November 1, 2024 and sell it today you would earn a total of 127.00 from holding Sealed Air or generate 3.75% 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. Lifeway Foods
Performance |
| Timeline |
| Sealed Air |
| Lifeway Foods |
Sealed Air and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Lifeway Foods
The main advantage of trading using opposite Sealed Air and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
| Lifeway Foods vs. Seneca Foods Corp | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Central Garden Pet | Lifeway Foods vs. Lifevantage |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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