Correlation Between Ball and Ranpak Holdings

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

Diversification Opportunities for Ball and Ranpak Holdings

-0.45

Correlation Coefficient

Ball  Ranpak Holdings

Very good diversification

The 3 months correlation between Ball and Ranpak is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ball Corp. and Ranpak Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ranpak Holdings Corp 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 Ranpak Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ranpak Holdings Corp has no effect on the direction of Ball i.e., Ball and Ranpak Holdings go up and down completely randomly.

Pair Corralation between Ball and Ranpak Holdings

Given the investment horizon of 90 days Ball Corporation is expected to under-perform the Ranpak Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Ball Corporation is 1.47 times less risky than Ranpak Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The Ranpak Holdings Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  666.00  in Ranpak Holdings Corp on September 3, 2024 and sell it today you would earn a total of  113.00  from holding Ranpak Holdings Corp or generate 16.97% return on investment over 90 days.

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

Ball Corp.  vs.  Ranpak Holdings Corp

Ball

Risk-Adjusted Performance

0 of 100

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.

Ranpak Holdings Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ranpak Holdings Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Ranpak Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ball and Ranpak Holdings

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

The idea behind Ball Corporation and Ranpak Holdings Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.