Correlation Between Ardagh Metal and O I

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

Diversification Opportunities for Ardagh Metal and O I

0.76

Correlation Coefficient

Ardagh Metal  O I

Poor diversification

The 3 months correlation between Ardagh and O I is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ardagh Metal Packaging and O I Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O I Glass 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 O I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O I Glass has no effect on the direction of Ardagh Metal i.e., Ardagh Metal and O I go up and down completely randomly.

Pair Corralation between Ardagh Metal and O I

Given the investment horizon of 90 days Ardagh Metal Packaging is expected to under-perform the O I. But the stock apears to be less risky and, when comparing its historical volatility, Ardagh Metal Packaging is 1.41 times less risky than O I. The stock trades about -0.22 of its potential returns per unit of risk. The O I Glass is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,111  in O I Glass on October 1, 2024 and sell it today you would lose (81.00) from holding O I Glass or give up 7.29% 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.  O I Glass

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.

O I Glass

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days O I Glass has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ardagh Metal and O I

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

The idea behind Ardagh Metal Packaging and O I Glass 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..