Correlation Between Sealed Air and Park Ohio
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Park Ohio 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 Park Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Park Ohio Holdings, you can compare the effects of market volatilities on Sealed Air and Park Ohio 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 Park Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Park Ohio.
Diversification Opportunities for Sealed Air and Park Ohio
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sealed and Park is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Park Ohio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Ohio Holdings 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 are associated (or correlated) with Park Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Ohio Holdings has no effect on the direction of Sealed Air i.e., Sealed Air and Park Ohio go up and down completely randomly.
Pair Corralation between Sealed Air and Park Ohio
Considering the 90-day investment horizon Sealed Air is expected to generate 0.6 times more return on investment than Park Ohio. However, Sealed Air is 1.67 times less risky than Park Ohio. It trades about -0.04 of its potential returns per unit of risk. Park Ohio Holdings is currently generating about -0.04 per unit of risk. If you would invest 3,522 in Sealed Air on September 23, 2024 and sell it today you would lose (163.00) from holding Sealed Air or give up 4.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sealed Air vs. Park Ohio Holdings
Performance |
Timeline |
Sealed Air |
Park Ohio Holdings |
Sealed Air and Park Ohio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sealed Air and Park Ohio
The main advantage of trading using opposite Sealed Air and Park Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Park Ohio 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 Park Ohio will offset losses from the drop in Park Ohio's long position.Sealed Air vs. Ball Corporation | Sealed Air vs. Silgan Holdings | Sealed Air vs. Reynolds Consumer Products | Sealed Air vs. Myers Industries |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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