Correlation Between Ball and Crown Holdings

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

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

Diversification Opportunities for Ball and Crown Holdings

-0.29

Correlation Coefficient

Ball  Crown Holdings

Very good diversification

The 3 months correlation between Ball and Crown is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ball Corp. and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Ball 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 Ball Corporation are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Ball i.e., Ball and Crown Holdings go up and down completely randomly.

Pair Corralation between Ball and Crown Holdings

Given the investment horizon of 90 days Ball Corporation is expected to under-perform the Crown Holdings. In addition to that, Ball is 1.1 times more volatile than Crown Holdings. It trades about -0.07 of its total potential returns per unit of risk. Crown Holdings is currently generating about 0.09 per unit of volatility. If you would invest  8,295  in Crown Holdings on December 27, 2024 and sell it today you would earn a total of  622.00  from holding Crown Holdings or generate 7.5% return on investment over 90 days.

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

Ball Corp.  vs.  Crown Holdings

Ball

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ball Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Crown Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Crown Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ball and Crown Holdings

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

The idea behind Ball Corporation and Crown Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.