Correlation Between TriMas and Reynolds Consumer

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

By analyzing existing cross correlation between TriMas and Reynolds Consumer Products, you can compare the effects of market volatilities on TriMas and Reynolds Consumer 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 Reynolds Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of TriMas and Reynolds Consumer.

Diversification Opportunities for TriMas and Reynolds Consumer

-0.04

Correlation Coefficient

TriMas  Reynolds Consumer

Good diversification

The 3 months correlation between TriMas and Reynolds is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding TriMas and Reynolds Consumer Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reynolds Consumer 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 Reynolds Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reynolds Consumer has no effect on the direction of TriMas i.e., TriMas and Reynolds Consumer go up and down completely randomly.

Pair Corralation between TriMas and Reynolds Consumer

Considering the 90-day investment horizon TriMas is expected to under-perform the Reynolds Consumer. In addition to that, TriMas is 1.26 times more volatile than Reynolds Consumer Products. It trades about -0.01 of its total potential returns per unit of risk. Reynolds Consumer Products is currently generating about 0.0 per unit of volatility. If you would invest  2,745  in Reynolds Consumer Products on September 28, 2024 and sell it today you would lose (9.00) from holding Reynolds Consumer Products or give up 0.33% of portfolio value over 90 days.

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

TriMas  vs.  Reynolds Consumer Products

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.

Reynolds Consumer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reynolds Consumer Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with TriMas and Reynolds Consumer

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

The idea behind TriMas and Reynolds Consumer Products 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.