Correlation Between Smithson Investment and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Smithson Investment 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 Smithson Investment and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and Sealed Air Corp, you can compare the effects of market volatilities on Smithson Investment 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 Smithson Investment with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Sealed Air.
Diversification Opportunities for Smithson Investment and Sealed Air
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Smithson and Sealed is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust 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 Smithson Investment 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 Smithson Investment Trust 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 Smithson Investment i.e., Smithson Investment and Sealed Air go up and down completely randomly.
Pair Corralation between Smithson Investment and Sealed Air
Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 0.66 times more return on investment than Sealed Air. However, Smithson Investment Trust is 1.52 times less risky than Sealed Air. It trades about 0.11 of its potential returns per unit of risk. Sealed Air Corp is currently generating about -0.03 per unit of risk. If you would invest 143,400 in Smithson Investment Trust on October 26, 2024 and sell it today you would earn a total of 8,600 from holding Smithson Investment Trust or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.44% |
| Values | Daily Returns |
Smithson Investment Trust vs. Sealed Air Corp
Performance |
| Timeline |
| Smithson Investment Trust |
| Sealed Air Corp |
Smithson Investment and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and Sealed Air
The main advantage of trading using opposite Smithson Investment and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment 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.| Smithson Investment vs. Spirent Communications plc | Smithson Investment vs. PPHE Hotel Group | Smithson Investment vs. Verizon Communications | Smithson Investment vs. Zoom Video Communications |
| Sealed Air vs. Bankers Investment Trust | Sealed Air vs. Dairy Farm International | Sealed Air vs. Scandinavian Tobacco Group | Sealed Air vs. Ecofin Global Utilities |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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