Correlation Between Ardagh Metal and Packaging Corp

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

Diversification Opportunities for Ardagh Metal and Packaging Corp

-0.34

Correlation Coefficient

Ardagh Metal  Packaging Corp

Very good diversification

The 3 months correlation between Ardagh and Packaging is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ardagh Metal Packaging and Packaging Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging Corp 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 Packaging Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging Corp has no effect on the direction of Ardagh Metal i.e., Ardagh Metal and Packaging Corp go up and down completely randomly.

Pair Corralation between Ardagh Metal and Packaging Corp

Given the investment horizon of 90 days Ardagh Metal Packaging is expected to under-perform the Packaging Corp. In addition to that, Ardagh Metal is 1.79 times more volatile than Packaging Corp of. It trades about -0.01 of its total potential returns per unit of risk. Packaging Corp of is currently generating about 0.1 per unit of volatility. If you would invest  12,221  in Packaging Corp of on September 21, 2024 and sell it today you would earn a total of  10,573  from holding Packaging Corp of or generate 86.52% return on investment over 90 days.

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

Ardagh Metal Packaging  vs.  Packaging Corp of

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.

Packaging Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging Corp of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward-looking signals, Packaging Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ardagh Metal and Packaging Corp

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

The idea behind Ardagh Metal Packaging and Packaging Corp of 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.