Correlation Between Sealed Air and Wheaton Precious

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

By analyzing existing cross correlation between Sealed Air Corp and Wheaton Precious Metals, you can compare the effects of market volatilities on Sealed Air and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Wheaton Precious.

Diversification Opportunities for Sealed Air and Wheaton Precious

0.52

Correlation Coefficient

Sealed Air  Wheaton Precious

Very weak diversification

The 3 months correlation between Sealed and Wheaton is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Corp are associated (or correlated) with Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Sealed Air i.e., Sealed Air and Wheaton Precious go up and down completely randomly.

Pair Corralation between Sealed Air and Wheaton Precious

Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Wheaton Precious. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air Corp is 1.76 times less risky than Wheaton Precious. The stock trades about -0.07 of its potential returns per unit of risk. The Wheaton Precious Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  478,468  in Wheaton Precious Metals on September 29, 2024 and sell it today you would lose (26,468) from holding Wheaton Precious Metals or give up 5.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Sealed Air Corp  vs.  Wheaton Precious Metals

Sealed Air Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sealed Air Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sealed Air is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Wheaton Precious Metals

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Wheaton Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Wheaton Precious is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sealed Air and Wheaton Precious

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

The idea behind Sealed Air Corp and Wheaton Precious Metals 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.