Correlation Between Ball and Graphic Packaging

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

By analyzing existing cross correlation between Ball Corporation and Graphic Packaging Holding, you can compare the effects of market volatilities on Ball and Graphic Packaging 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 Graphic Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ball and Graphic Packaging.

Diversification Opportunities for Ball and Graphic Packaging

0.67

Correlation Coefficient

Ball  Graphic Packaging

Poor diversification

The 3 months correlation between Ball and Graphic is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ball Corp. and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding 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 Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of Ball i.e., Ball and Graphic Packaging go up and down completely randomly.

Pair Corralation between Ball and Graphic Packaging

Given the investment horizon of 90 days Ball Corporation is expected to under-perform the Graphic Packaging. In addition to that, Ball is 1.15 times more volatile than Graphic Packaging Holding. It trades about -0.05 of its total potential returns per unit of risk. Graphic Packaging Holding is currently generating about -0.03 per unit of volatility. If you would invest  2,701  in Graphic Packaging Holding on December 28, 2024 and sell it today you would lose (95.00) from holding Graphic Packaging Holding or give up 3.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Ball Corp.  vs.  Graphic Packaging Holding

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 quite persistent essential indicators, Ball is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Graphic Packaging Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Graphic Packaging Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Graphic Packaging is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ball and Graphic Packaging

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

The idea behind Ball Corporation and Graphic Packaging Holding 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.