Correlation Between Spirent Communications and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Sealed Air 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 Spirent Communications and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Sealed Air Corp, you can compare the effects of market volatilities on Spirent Communications and Sealed Air 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 Spirent Communications with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Sealed Air.
Diversification Opportunities for Spirent Communications and Sealed Air
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and Sealed is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air Corp has no effect on the direction of Spirent Communications i.e., Spirent Communications and Sealed Air go up and down completely randomly.
Pair Corralation between Spirent Communications and Sealed Air
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.51 times more return on investment than Sealed Air. However, Spirent Communications plc is 1.96 times less risky than Sealed Air. It trades about -0.17 of its potential returns per unit of risk. Sealed Air Corp is currently generating about -0.28 per unit of risk. If you would invest 17,720 in Spirent Communications plc on October 16, 2024 and sell it today you would lose (470.00) from holding Spirent Communications plc or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Sealed Air Corp
Performance |
| Timeline |
| Spirent Communications |
| Sealed Air Corp |
Spirent Communications and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Sealed Air
The main advantage of trading using opposite Spirent Communications and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.| Spirent Communications vs. Solstad Offshore ASA | Spirent Communications vs. Monster Beverage Corp | Spirent Communications vs. Medical Properties Trust | Spirent Communications vs. SBM Offshore NV |
| Sealed Air vs. Axfood AB | Sealed Air vs. Austevoll Seafood ASA | Sealed Air vs. Prosiebensat 1 Media | Sealed Air vs. Hilton Food Group |
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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