Correlation Between Apple and SEALED AIR

Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and SEALED AIR , you can compare the effects of market volatilities on Apple 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 Apple with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SEALED AIR.

Diversification Opportunities for Apple and SEALED AIR

0.82

Correlation Coefficient

Apple  SEALED AIR

Very poor diversification

The 3 months correlation between Apple and SEALED is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and Apple 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 Apple Inc 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 Apple i.e., Apple and SEALED AIR go up and down completely randomly.

Pair Corralation between Apple and SEALED AIR

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.68 times more return on investment than SEALED AIR. However, Apple Inc is 1.47 times less risky than SEALED AIR. It trades about 0.26 of its potential returns per unit of risk. SEALED AIR is currently generating about 0.12 per unit of risk. If you would invest  19,864  in Apple Inc on September 18, 2024 and sell it today you would earn a total of  4,221  from holding Apple Inc or generate 21.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Apple Inc  vs.  SEALED AIR

Apple Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

SEALED AIR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SEALED AIR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apple and SEALED AIR

The main advantage of trading using opposite Apple and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.

The idea behind Apple Inc and SEALED AIR 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.