Correlation Between Ardagh Metal and Ball

Can any of the company-specific risk be diversified away by investing in both Ardagh Metal and Ball 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 Ball 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 Ball Corporation, you can compare the effects of market volatilities on Ardagh Metal and Ball 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 Ball. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardagh Metal and Ball.

Diversification Opportunities for Ardagh Metal and Ball

0.81

Correlation Coefficient

Ardagh Metal  Ball

Very poor diversification

The 3 months correlation between Ardagh and Ball is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ardagh Metal Packaging and Ball Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ball 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 Ball. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ball has no effect on the direction of Ardagh Metal i.e., Ardagh Metal and Ball go up and down completely randomly.

Pair Corralation between Ardagh Metal and Ball

Given the investment horizon of 90 days Ardagh Metal Packaging is expected to generate 1.25 times more return on investment than Ball. However, Ardagh Metal is 1.25 times more volatile than Ball Corporation. It trades about -0.14 of its potential returns per unit of risk. Ball Corporation is currently generating about -0.17 per unit of risk. If you would invest  367.00  in Ardagh Metal Packaging on September 30, 2024 and sell it today you would lose (65.00) from holding Ardagh Metal Packaging or give up 17.71% of portfolio value over 90 days.

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

Ardagh Metal Packaging  vs.  Ball Corp.

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 unsteady 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.

Ball

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ball Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ardagh Metal and Ball

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

The idea behind Ardagh Metal Packaging and Ball Corporation 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 Global Correlations module to find global opportunities by holding instruments from different markets.