Correlation Between Air Transport and SEALED AIR

Can any of the company-specific risk be diversified away by investing in both Air Transport and SEALED AIR 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 Air Transport and SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Transport Services and SEALED AIR , you can compare the effects of market volatilities on Air Transport and SEALED AIR 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 Air Transport with a short position of SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and SEALED AIR.

Diversification Opportunities for Air Transport and SEALED AIR

0.85

Correlation Coefficient

Air Transport  SEALED AIR

Very poor diversification

The 3 months correlation between Air and SEALED is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR and Air Transport 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 Air Transport Services are associated (or correlated) with SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of Air Transport i.e., Air Transport and SEALED AIR go up and down completely randomly.

Pair Corralation between Air Transport and SEALED AIR

Assuming the 90 days horizon Air Transport Services is expected to generate 0.38 times more return on investment than SEALED AIR. However, Air Transport Services is 2.65 times less risky than SEALED AIR. It trades about -0.05 of its potential returns per unit of risk. SEALED AIR is currently generating about -0.15 per unit of risk. If you would invest  2,100  in Air Transport Services on December 28, 2024 and sell it today you would lose (40.00) from holding Air Transport Services or give up 1.9% of portfolio value over 90 days.

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

Air Transport Services  vs.  SEALED AIR

Air Transport Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Transport Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SEALED AIR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEALED AIR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Air Transport and SEALED AIR

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

The idea behind Air Transport Services and SEALED AIR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.