Correlation Between Greif Bros and Consumer Discretionary

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

By analyzing existing cross correlation between Greif Bros and Consumer Discretionary Portfolio, you can compare the effects of market volatilities on Greif Bros and Consumer Discretionary 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 Greif Bros with a short position of Consumer Discretionary. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greif Bros and Consumer Discretionary.

Diversification Opportunities for Greif Bros and Consumer Discretionary

0.73

Correlation Coefficient

Greif Bros  Consumer Discretionary

Poor diversification

The 3 months correlation between Greif and Consumer is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Greif Bros and Consumer Discretionary Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Discretionary and Greif Bros 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 Greif Bros are associated (or correlated) with Consumer Discretionary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Discretionary has no effect on the direction of Greif Bros i.e., Greif Bros and Consumer Discretionary go up and down completely randomly.

Pair Corralation between Greif Bros and Consumer Discretionary

Considering the 90-day investment horizon Greif Bros is expected to under-perform the Consumer Discretionary. But the stock apears to be less risky and, when comparing its historical volatility, Greif Bros is 1.14 times less risky than Consumer Discretionary. The stock trades about -0.03 of its potential returns per unit of risk. The Consumer Discretionary Portfolio is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,501  in Consumer Discretionary Portfolio on February 26, 2025 and sell it today you would lose (112.00) from holding Consumer Discretionary Portfolio or give up 1.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Greif Bros  vs.  Consumer Discretionary Portfol

Greif Bros

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greif Bros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greif Bros is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Consumer Discretionary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consumer Discretionary Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Consumer Discretionary is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Greif Bros and Consumer Discretionary

The main advantage of trading using opposite Greif Bros and Consumer Discretionary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greif Bros position performs unexpectedly, Consumer Discretionary 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 Consumer Discretionary will offset losses from the drop in Consumer Discretionary's long position.

The idea behind Greif Bros and Consumer Discretionary Portfolio 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.