Correlation Between Graphic Packaging and AES
Can any of the company-specific risk be diversified away by investing in both Graphic Packaging and AES 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 Graphic Packaging and AES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphic Packaging Holding and The AES, you can compare the effects of market volatilities on Graphic Packaging and AES 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 Graphic Packaging with a short position of AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphic Packaging and AES.
Diversification Opportunities for Graphic Packaging and AES
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Graphic and AES is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and Graphic Packaging 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 Graphic Packaging Holding are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Graphic Packaging i.e., Graphic Packaging and AES go up and down completely randomly.
Pair Corralation between Graphic Packaging and AES
Considering the 90-day investment horizon Graphic Packaging Holding is expected to under-perform the AES. But the stock apears to be less risky and, when comparing its historical volatility, Graphic Packaging Holding is 2.0 times less risky than AES. The stock trades about -0.17 of its potential returns per unit of risk. The The AES is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,515 in The AES on January 25, 2024 and sell it today you would earn a total of 46.00 from holding The AES or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Graphic Packaging Holding vs. The AES
Performance |
| Timeline |
| Graphic Packaging Holding |
| AES |
Graphic Packaging and AES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphic Packaging and AES
The main advantage of trading using opposite Graphic Packaging and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphic Packaging position performs unexpectedly, AES 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 AES will offset losses from the drop in AES's long position.| Graphic Packaging vs. Pactiv Evergreen | Graphic Packaging vs. Myers Industries | Graphic Packaging vs. Avery Dennison Corp | Graphic Packaging vs. Karat Packaging |
| AES vs. Cleanaway Waste Management | AES vs. Ameriprise Financial | AES vs. Webster Financial | AES vs. Platinum Investment Management |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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