Correlation Between Advanced Container and Pactiv Evergreen

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

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

Diversification Opportunities for Advanced Container and Pactiv Evergreen

-0.36

Correlation Coefficient

Advanced Container  Pactiv Evergreen

Very good diversification

The 3 months correlation between Advanced and Pactiv is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Container Technologie and Pactiv Evergreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pactiv Evergreen and Advanced Container 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 Advanced Container Technologies 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 Advanced Container i.e., Advanced Container and Pactiv Evergreen go up and down completely randomly.

Pair Corralation between Advanced Container and Pactiv Evergreen

Given the investment horizon of 90 days Advanced Container Technologies is expected to under-perform the Pactiv Evergreen. In addition to that, Advanced Container is 2.03 times more volatile than Pactiv Evergreen. It trades about -0.12 of its total potential returns per unit of risk. Pactiv Evergreen is currently generating about 0.22 per unit of volatility. If you would invest  1,157  in Pactiv Evergreen on September 21, 2024 and sell it today you would earn a total of  570.00  from holding Pactiv Evergreen or generate 49.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Advanced Container Technologie  vs.  Pactiv Evergreen

Advanced Container

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Container Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain fairly 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 the ETF investors.

Pactiv Evergreen

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pactiv Evergreen are ranked lower than 17 (%) 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 Advanced Container and Pactiv Evergreen

The main advantage of trading using opposite Advanced Container and Pactiv Evergreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Container 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 Advanced Container Technologies 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.