Correlation Between Ardagh Metal and Amcor PLC

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

By analyzing existing cross correlation between Ardagh Metal Packaging and Amcor PLC, you can compare the effects of market volatilities on Ardagh Metal and Amcor PLC 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 Ardagh Metal with a short position of Amcor PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardagh Metal and Amcor PLC.

Diversification Opportunities for Ardagh Metal and Amcor PLC

0.68

Correlation Coefficient

Ardagh Metal  Amcor PLC

Poor diversification

The 3 months correlation between Ardagh and Amcor is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ardagh Metal Packaging and Amcor PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor PLC and Ardagh Metal 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 Ardagh Metal Packaging are associated (or correlated) with Amcor PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor PLC has no effect on the direction of Ardagh Metal i.e., Ardagh Metal and Amcor PLC go up and down completely randomly.

Pair Corralation between Ardagh Metal and Amcor PLC

Given the investment horizon of 90 days Ardagh Metal Packaging is expected to under-perform the Amcor PLC. In addition to that, Ardagh Metal is 2.26 times more volatile than Amcor PLC. It trades about -0.38 of its total potential returns per unit of risk. Amcor PLC is currently generating about -0.54 per unit of volatility. If you would invest  1,047  in Amcor PLC on September 22, 2024 and sell it today you would lose (107.00) from holding Amcor PLC or give up 10.22% of portfolio value over 90 days.

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

Ardagh Metal Packaging  vs.  Amcor PLC

Ardagh Metal Packaging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardagh Metal Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Amcor PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amcor PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ardagh Metal and Amcor PLC

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

The idea behind Ardagh Metal Packaging and Amcor PLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.