Correlation Between TriMas and Pactiv Evergreen

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

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

Diversification Opportunities for TriMas and Pactiv Evergreen

-0.3

Correlation Coefficient

TriMas  Pactiv Evergreen

Very good diversification

The 3 months correlation between TriMas and Pactiv is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding TriMas and Pactiv Evergreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pactiv Evergreen and TriMas 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 TriMas are associated (or correlated) with Pactiv Evergreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pactiv Evergreen has no effect on the direction of TriMas i.e., TriMas and Pactiv Evergreen go up and down completely randomly.

Pair Corralation between TriMas and Pactiv Evergreen

Considering the 90-day investment horizon TriMas is expected to under-perform the Pactiv Evergreen. But the stock apears to be less risky and, when comparing its historical volatility, TriMas is 2.1 times less risky than Pactiv Evergreen. The stock trades about -0.01 of its potential returns per unit of risk. The Pactiv Evergreen is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,300  in Pactiv Evergreen on September 28, 2024 and sell it today you would earn a total of  444.00  from holding Pactiv Evergreen or generate 34.15% return on investment over 90 days.

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

TriMas  vs.  Pactiv Evergreen

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.

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.

Pair Trading with TriMas and Pactiv Evergreen

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

The idea behind TriMas and Pactiv Evergreen 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.