Correlation Between Seven West and CCL Industries
Can any of the company-specific risk be diversified away by investing in both Seven West and CCL Industries 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 Seven West and CCL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and CCL Industries, you can compare the effects of market volatilities on Seven West and CCL Industries 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 Seven West with a short position of CCL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and CCL Industries.
Diversification Opportunities for Seven West and CCL Industries
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seven and CCL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries and Seven West 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 Seven West Media are associated (or correlated) with CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Seven West i.e., Seven West and CCL Industries go up and down completely randomly.
Pair Corralation between Seven West and CCL Industries
Assuming the 90 days horizon Seven West Media is expected to generate 2.16 times more return on investment than CCL Industries. However, Seven West is 2.16 times more volatile than CCL Industries. It trades about -0.04 of its potential returns per unit of risk. CCL Industries is currently generating about -0.12 per unit of risk. If you would invest 9.35 in Seven West Media on August 29, 2024 and sell it today you would lose (0.40) from holding Seven West Media or give up 4.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Seven West Media vs. CCL Industries
Performance |
| Timeline |
| Seven West Media |
| CCL Industries |
Seven West and CCL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and CCL Industries
The main advantage of trading using opposite Seven West and CCL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, CCL Industries 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 CCL Industries will offset losses from the drop in CCL Industries' long position.| Seven West vs. Live Nation Entertainment | Seven West vs. Superior Plus Corp | Seven West vs. NMI Holdings | Seven West vs. SIVERS SEMICONDUCTORS AB |
| CCL Industries vs. ETFS Coffee ETC | CCL Industries vs. XLMedia PLC | CCL Industries vs. Seven West Media | CCL Industries vs. Live Nation Entertainment |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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