Correlation Between Amcor PLC and Sonoco Products

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

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

Diversification Opportunities for Amcor PLC and Sonoco Products

0.81

Correlation Coefficient

Amcor PLC  Sonoco Products

Very poor diversification

The 3 months correlation between Amcor and Sonoco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amcor PLC and Sonoco Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoco Products and Amcor PLC 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 Amcor PLC are associated (or correlated) with Sonoco Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoco Products has no effect on the direction of Amcor PLC i.e., Amcor PLC and Sonoco Products go up and down completely randomly.

Pair Corralation between Amcor PLC and Sonoco Products

Given the investment horizon of 90 days Amcor PLC is expected to generate 1.09 times more return on investment than Sonoco Products. However, Amcor PLC is 1.09 times more volatile than Sonoco Products. It trades about 0.02 of its potential returns per unit of risk. Sonoco Products is currently generating about -0.05 per unit of risk. If you would invest  973.00  in Amcor PLC on September 15, 2024 and sell it today you would earn a total of  17.00  from holding Amcor PLC or generate 1.75% return on investment over 90 days.

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

Amcor PLC  vs.  Sonoco Products

Amcor PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amcor PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Sonoco Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonoco Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sonoco Products is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Amcor PLC and Sonoco Products

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

The idea behind Amcor PLC and Sonoco Products 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.