Correlation Between Sonoco Products and Pactiv Evergreen
Can any of the company-specific risk be diversified away by investing in both Sonoco Products and Pactiv Evergreen 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 Sonoco Products and Pactiv Evergreen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonoco Products and Pactiv Evergreen, you can compare the effects of market volatilities on Sonoco Products and Pactiv Evergreen 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 Sonoco Products with a short position of Pactiv Evergreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonoco Products and Pactiv Evergreen.
Diversification Opportunities for Sonoco Products and Pactiv Evergreen
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonoco and Pactiv is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sonoco Products and Pactiv Evergreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pactiv Evergreen and Sonoco Products 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 Sonoco Products are associated (or correlated) with Pactiv Evergreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pactiv Evergreen has no effect on the direction of Sonoco Products i.e., Sonoco Products and Pactiv Evergreen go up and down completely randomly.
Pair Corralation between Sonoco Products and Pactiv Evergreen
Considering the 90-day investment horizon Sonoco Products is expected to under-perform the Pactiv Evergreen. But the stock apears to be less risky and, when comparing its historical volatility, Sonoco Products is 2.08 times less risky than Pactiv Evergreen. The stock trades about -0.01 of its potential returns per unit of risk. The Pactiv Evergreen is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,128 in Pactiv Evergreen on August 27, 2024 and sell it today you would earn a total of 192.00 from holding Pactiv Evergreen or generate 17.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonoco Products vs. Pactiv Evergreen
Performance |
| Timeline |
| Sonoco Products |
| Pactiv Evergreen |
Sonoco Products and Pactiv Evergreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonoco Products and Pactiv Evergreen
The main advantage of trading using opposite Sonoco Products and Pactiv Evergreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonoco Products position performs unexpectedly, Pactiv Evergreen 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 Pactiv Evergreen will offset losses from the drop in Pactiv Evergreen's long position.| Sonoco Products vs. AptarGroup | Sonoco Products vs. Silgan Holdings | Sonoco Products vs. RPM International | Sonoco Products vs. Packaging Corp of |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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