Correlation Between Crown Holdings and TriMas

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

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

Diversification Opportunities for Crown Holdings and TriMas

0.51

Correlation Coefficient

Crown Holdings  TriMas

Very weak diversification

The 3 months correlation between Crown and TriMas is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and TriMas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriMas and Crown Holdings 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 Crown Holdings are associated (or correlated) with TriMas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriMas has no effect on the direction of Crown Holdings i.e., Crown Holdings and TriMas go up and down completely randomly.

Pair Corralation between Crown Holdings and TriMas

Considering the 90-day investment horizon Crown Holdings is expected to under-perform the TriMas. But the stock apears to be less risky and, when comparing its historical volatility, Crown Holdings is 1.65 times less risky than TriMas. The stock trades about -0.16 of its potential returns per unit of risk. The TriMas is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,552  in TriMas on September 27, 2024 and sell it today you would lose (93.00) from holding TriMas or give up 3.64% of portfolio value over 90 days.

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

Crown Holdings  vs.  TriMas

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

TriMas

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Crown Holdings and TriMas

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

The idea behind Crown Holdings and TriMas 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 Transaction History module to view history of all your transactions and understand their impact on performance.