Correlation Between Sealed Air and Packaging Corp

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Can any of the company-specific risk be diversified away by investing in both Sealed Air and Packaging Corp 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 Sealed Air and Packaging Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Packaging Corp, you can compare the effects of market volatilities on Sealed Air and Packaging Corp 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 Sealed Air with a short position of Packaging Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Packaging Corp.

Diversification Opportunities for Sealed Air and Packaging Corp

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Sealed and Packaging is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Packaging Corp Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging Corp and Sealed Air 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 Sealed Air are associated (or correlated) with Packaging Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging Corp has no effect on the direction of Sealed Air i.e., Sealed Air and Packaging Corp go up and down completely randomly.

Pair Corralation between Sealed Air and Packaging Corp

Considering the 90-day investment horizon Sealed Air is expected to generate 1.42 times less return on investment than Packaging Corp. In addition to that, Sealed Air is 1.44 times more volatile than Packaging Corp. It trades about 0.18 of its total potential returns per unit of risk. Packaging Corp is currently generating about 0.36 per unit of volatility. If you would invest  17,360  in Packaging Corp on December 29, 2023 and sell it today you would earn a total of  1,534  from holding Packaging Corp or generate 8.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sealed Air  vs.  Packaging Corp Of

 Performance 
       Timeline  
Sealed Air 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Sealed Air is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Packaging Corp 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Packaging Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Packaging Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Sealed Air and Packaging Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sealed Air and Packaging Corp

The main advantage of trading using opposite Sealed Air and Packaging Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Packaging Corp 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 Packaging Corp will offset losses from the drop in Packaging Corp's long position.
The idea behind Sealed Air and Packaging Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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