Correlation Between BBB Foods and Sealed Air
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Sealed Air, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Sealed Air.
Diversification Opportunities for BBB Foods and Sealed Air
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBB and Sealed is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air and BBB Foods 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 BBB Foods 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 has no effect on the direction of BBB Foods i.e., BBB Foods and Sealed Air go up and down completely randomly.
Pair Corralation between BBB Foods and Sealed Air
Given the investment horizon of 90 days BBB Foods is expected to generate 1.26 times more return on investment than Sealed Air. However, BBB Foods is 1.26 times more volatile than Sealed Air. It trades about 0.01 of its potential returns per unit of risk. Sealed Air is currently generating about -0.04 per unit of risk. If you would invest 3,340 in BBB Foods on August 23, 2024 and sell it today you would earn a total of 0.00 from holding BBB Foods or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. Sealed Air
Performance |
| Timeline |
| BBB Foods |
| Sealed Air |
BBB Foods and Sealed Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Sealed Air
The main advantage of trading using opposite BBB Foods and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. Sun Life Financial | BBB Foods vs. Repligen | BBB Foods vs. Eastern Co | BBB Foods vs. Aegon NV ADR |
| Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |