Correlation Between TriMas and Sonoco Products

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

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

Diversification Opportunities for TriMas and Sonoco Products

0.07

Correlation Coefficient

TriMas  Sonoco Products

Significant diversification

The 3 months correlation between TriMas and Sonoco is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding TriMas and Sonoco Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoco Products 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 Sonoco Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoco Products has no effect on the direction of TriMas i.e., TriMas and Sonoco Products go up and down completely randomly.

Pair Corralation between TriMas and Sonoco Products

Considering the 90-day investment horizon TriMas is expected to under-perform the Sonoco Products. But the stock apears to be less risky and, when comparing its historical volatility, TriMas is 1.35 times less risky than Sonoco Products. The stock trades about -0.37 of its potential returns per unit of risk. The Sonoco Products is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  5,131  in Sonoco Products on September 28, 2024 and sell it today you would lose (211.00) from holding Sonoco Products or give up 4.11% of portfolio value over 90 days.

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

TriMas  vs.  Sonoco 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.

Sonoco Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonoco 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 Sonoco Products

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

The idea behind TriMas and Sonoco 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.