Correlation Between Good Natured and Silgan Holdings

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

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

Diversification Opportunities for Good Natured and Silgan Holdings

0.11

Correlation Coefficient

Good Natured  Silgan Holdings

Average diversification

The 3 months correlation between Good and Silgan is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding good natured Products and Silgan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgan Holdings and Good Natured 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 good natured Products are associated (or correlated) with Silgan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgan Holdings has no effect on the direction of Good Natured i.e., Good Natured and Silgan Holdings go up and down completely randomly.

Pair Corralation between Good Natured and Silgan Holdings

Assuming the 90 days horizon good natured Products is expected to generate 15.84 times more return on investment than Silgan Holdings. However, Good Natured is 15.84 times more volatile than Silgan Holdings. It trades about 0.05 of its potential returns per unit of risk. Silgan Holdings is currently generating about 0.11 per unit of risk. If you would invest  0.70  in good natured Products on September 14, 2024 and sell it today you would lose (0.16) from holding good natured Products or give up 22.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

good natured Products  vs.  Silgan Holdings

good natured Products

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days good natured Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Good Natured reported solid returns over the last few months and may actually be approaching a breakup point.

Silgan Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silgan Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Silgan Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Good Natured and Silgan Holdings

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

The idea behind good natured Products and Silgan Holdings 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.