Correlation Between Pactiv Evergreen and Cascades

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

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

Diversification Opportunities for Pactiv Evergreen and Cascades

0.75

Correlation Coefficient

Pactiv Evergreen  Cascades

Poor diversification

The 3 months correlation between Pactiv and Cascades is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pactiv Evergreen and Cascades in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascades and Pactiv Evergreen 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 Pactiv Evergreen are associated (or correlated) with Cascades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascades has no effect on the direction of Pactiv Evergreen i.e., Pactiv Evergreen and Cascades go up and down completely randomly.

Pair Corralation between Pactiv Evergreen and Cascades

Given the investment horizon of 90 days Pactiv Evergreen is expected to generate 0.77 times more return on investment than Cascades. However, Pactiv Evergreen is 1.3 times less risky than Cascades. It trades about 0.05 of its potential returns per unit of risk. Cascades is currently generating about 0.04 per unit of risk. If you would invest  1,069  in Pactiv Evergreen on September 29, 2024 and sell it today you would earn a total of  671.00  from holding Pactiv Evergreen or generate 62.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.62%
Values	Daily Returns

Pactiv Evergreen  vs.  Cascades

Pactiv Evergreen

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pactiv Evergreen are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pactiv Evergreen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cascades

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cascades are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cascades is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pactiv Evergreen and Cascades

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

The idea behind Pactiv Evergreen and Cascades 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.