Correlation Between Amcor PLC and Packaging Corp

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

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

Diversification Opportunities for Amcor PLC and Packaging Corp

-0.5

Correlation Coefficient

Amcor PLC  Packaging Corp

Very good diversification

The 3 months correlation between Amcor and Packaging is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Amcor PLC and Packaging Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging Corp and Amcor PLC 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 Amcor PLC 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 Amcor PLC i.e., Amcor PLC and Packaging Corp go up and down completely randomly.

Pair Corralation between Amcor PLC and Packaging Corp

Given the investment horizon of 90 days Amcor PLC is expected to generate 0.72 times more return on investment than Packaging Corp. However, Amcor PLC is 1.39 times less risky than Packaging Corp. It trades about 0.06 of its potential returns per unit of risk. Packaging Corp of is currently generating about -0.1 per unit of risk. If you would invest  922.00  in Amcor PLC on December 29, 2024 and sell it today you would earn a total of  42.00  from holding Amcor PLC or generate 4.56% return on investment over 90 days.

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

Amcor PLC  vs.  Packaging Corp of

Amcor PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amcor PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Amcor PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Packaging Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Packaging Corp of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Amcor PLC and Packaging Corp

The main advantage of trading using opposite Amcor PLC and Packaging Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcor PLC 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 Amcor PLC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.