Correlation Between Packaging Corp and Ball

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

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

Diversification Opportunities for Packaging Corp and Ball

0.71

Correlation Coefficient

Packaging Corp  Ball

Poor diversification

The 3 months correlation between Packaging and Ball is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Packaging Corp of and Ball Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ball and Packaging Corp 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 Packaging Corp of are associated (or correlated) with Ball. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ball has no effect on the direction of Packaging Corp i.e., Packaging Corp and Ball go up and down completely randomly.

Pair Corralation between Packaging Corp and Ball

Considering the 90-day investment horizon Packaging Corp of is expected to generate 0.79 times more return on investment than Ball. However, Packaging Corp of is 1.27 times less risky than Ball. It trades about 0.07 of its potential returns per unit of risk. Ball Corporation is currently generating about 0.01 per unit of risk. If you would invest  12,477  in Packaging Corp of on January 15, 2025 and sell it today you would earn a total of  6,588  from holding Packaging Corp of or generate 52.8% return on investment over 90 days.

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

Packaging Corp of  vs.  Ball Corp.

Packaging Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Packaging Corp of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ball

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ball Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Packaging Corp and Ball

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

The idea behind Packaging Corp of and Ball Corporation 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.