Correlation Between Silgan Holdings and TriMas

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

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

Diversification Opportunities for Silgan Holdings and TriMas

0.15

Correlation Coefficient

Silgan Holdings  TriMas

Average diversification

The 3 months correlation between Silgan and TriMas is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Silgan Holdings and TriMas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriMas and Silgan 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 Silgan 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 Silgan Holdings i.e., Silgan Holdings and TriMas go up and down completely randomly.

Pair Corralation between Silgan Holdings and TriMas

Given the investment horizon of 90 days Silgan Holdings is expected to under-perform the TriMas. But the stock apears to be less risky and, when comparing its historical volatility, Silgan Holdings is 1.04 times less risky than TriMas. The stock trades about -0.44 of its potential returns per unit of risk. The TriMas is currently generating about -0.37 of returns per unit of risk over similar time horizon. If you would invest  2,638  in TriMas on September 28, 2024 and sell it today you would lose (179.00) from holding TriMas or give up 6.79% of portfolio value over 90 days.

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

Silgan Holdings  vs.  TriMas

Silgan Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silgan Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Silgan Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the 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 Silgan Holdings and TriMas

The main advantage of trading using opposite Silgan Holdings and TriMas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silgan 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 Silgan 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.