Correlation Between ALVGR and Sealed Air

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

By analyzing existing cross correlation between ALVGR 35 and Sealed Air, you can compare the effects of market volatilities on ALVGR and Sealed Air 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 ALVGR with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALVGR and Sealed Air.

Diversification Opportunities for ALVGR and Sealed Air

0.62

Correlation Coefficient

ALVGR  Sealed Air

Poor diversification

The 3 months correlation between ALVGR and Sealed is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ALVGR 35 and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air and ALVGR 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 ALVGR 35 are associated (or correlated) with Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of ALVGR i.e., ALVGR and Sealed Air go up and down completely randomly.

Pair Corralation between ALVGR and Sealed Air

Assuming the 90 days trading horizon ALVGR 35 is expected to generate 1.55 times more return on investment than Sealed Air. However, ALVGR is 1.55 times more volatile than Sealed Air. It trades about 0.0 of its potential returns per unit of risk. Sealed Air is currently generating about -0.01 per unit of risk. If you would invest  8,513  in ALVGR 35 on September 12, 2024 and sell it today you would lose (395.00) from holding ALVGR 35 or give up 4.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	18.99%
Values	Daily Returns

ALVGR 35  vs.  Sealed Air

ALVGR 35

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALVGR 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for ALVGR 35 investors.

Sealed Air

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Sealed Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ALVGR and Sealed Air

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

The idea behind ALVGR 35 and Sealed Air 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.