Correlation Between Sealed Air and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Sealed Air and PacifiCorp 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 PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and PacifiCorp, you can compare the effects of market volatilities on Sealed Air and PacifiCorp 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 PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and PacifiCorp.
Diversification Opportunities for Sealed Air and PacifiCorp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and PacifiCorp is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp 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 PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Sealed Air i.e., Sealed Air and PacifiCorp go up and down completely randomly.
Pair Corralation between Sealed Air and PacifiCorp
Considering the 90-day investment horizon Sealed Air is expected to generate 0.57 times more return on investment than PacifiCorp. However, Sealed Air is 1.76 times less risky than PacifiCorp. It trades about 0.12 of its potential returns per unit of risk. PacifiCorp is currently generating about -0.01 per unit of risk. If you would invest 3,567 in Sealed Air on September 12, 2024 and sell it today you would earn a total of 117.00 from holding Sealed Air or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sealed Air vs. PacifiCorp
Performance |
| Timeline |
| Sealed Air |
| PacifiCorp |
Sealed Air and PacifiCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and PacifiCorp
The main advantage of trading using opposite Sealed Air and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp'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 |
| PacifiCorp vs. Lipocine | PacifiCorp vs. Catalyst Pharmaceuticals | PacifiCorp vs. Western Asset Investment | PacifiCorp vs. BW Offshore Limited |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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