Correlation Between Sealed Air and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Newmont Corp 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 Sealed Air and Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air Corp and Newmont Corp, you can compare the effects of market volatilities on Sealed Air and Newmont Corp 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 Sealed Air with a short position of Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Newmont Corp.
Diversification Opportunities for Sealed Air and Newmont Corp
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sealed and Newmont is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp and Sealed Air 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 Sealed Air Corp are associated (or correlated) with Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Sealed Air i.e., Sealed Air and Newmont Corp go up and down completely randomly.
Pair Corralation between Sealed Air and Newmont Corp
Assuming the 90 days trading horizon Sealed Air Corp is expected to generate 0.54 times more return on investment than Newmont Corp. However, Sealed Air Corp is 1.83 times less risky than Newmont Corp. It trades about -0.07 of its potential returns per unit of risk. Newmont Corp is currently generating about -0.19 per unit of risk. If you would invest 3,498 in Sealed Air Corp on October 15, 2024 and sell it today you would lose (215.00) from holding Sealed Air Corp or give up 6.15% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.08% |
Values | Daily Returns |
Sealed Air Corp vs. Newmont Corp
Performance |
Timeline |
Sealed Air Corp |
Newmont Corp |
Sealed Air and Newmont Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sealed Air and Newmont Corp
The main advantage of trading using opposite Sealed Air and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Newmont Corp 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 Newmont Corp will offset losses from the drop in Newmont Corp's long position.Sealed Air vs. Wyndham Hotels Resorts | ||
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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