Correlation Between Alliance Creative and Pactiv Evergreen

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

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

Diversification Opportunities for Alliance Creative and Pactiv Evergreen

-0.34

Correlation Coefficient

Alliance Creative  Pactiv Evergreen

Very good diversification

The 3 months correlation between Alliance and Pactiv is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Creative Gr and Pactiv Evergreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pactiv Evergreen and Alliance Creative 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 Alliance Creative Gr 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 Alliance Creative i.e., Alliance Creative and Pactiv Evergreen go up and down completely randomly.

Pair Corralation between Alliance Creative and Pactiv Evergreen

Given the investment horizon of 90 days Alliance Creative Gr is expected to under-perform the Pactiv Evergreen. In addition to that, Alliance Creative is 3.49 times more volatile than Pactiv Evergreen. It trades about -0.07 of its total potential returns per unit of risk. Pactiv Evergreen is currently generating about 0.31 per unit of volatility. If you would invest  1,348  in Pactiv Evergreen on September 25, 2024 and sell it today you would earn a total of  383.00  from holding Pactiv Evergreen or generate 28.41% return on investment over 90 days.

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

Alliance Creative Gr  vs.  Pactiv Evergreen

Alliance Creative

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Creative Gr are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, Alliance Creative showed solid returns over the last few months and may actually be approaching a breakup point.

Pactiv Evergreen

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pactiv Evergreen are ranked lower than 16 (%) 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 Alliance Creative and Pactiv Evergreen

The main advantage of trading using opposite Alliance Creative and Pactiv Evergreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Creative 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 Alliance Creative Gr 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.