Correlation Between Ball and Packaging Corp

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

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

Diversification Opportunities for Ball and Packaging Corp

-0.67

Correlation Coefficient

Ball  Packaging Corp

Excellent diversification

The 3 months correlation between Ball and Packaging is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ball Corp. and Packaging Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging 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 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 Ball i.e., Ball and Packaging Corp go up and down completely randomly.

Pair Corralation between Ball and Packaging Corp

Given the investment horizon of 90 days Ball is expected to generate 2.84 times less return on investment than Packaging Corp. In addition to that, Ball is 1.29 times more volatile than Packaging Corp of. It trades about 0.03 of its total potential returns per unit of risk. Packaging Corp of is currently generating about 0.1 per unit of volatility. If you would invest  12,694  in Packaging Corp of on September 4, 2024 and sell it today you would earn a total of  11,786  from holding Packaging Corp of or generate 92.85% return on investment over 90 days.

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

Ball Corp.  vs.  Packaging Corp of

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.

Packaging Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging Corp of are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Packaging Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ball and Packaging Corp

The main advantage of trading using opposite Ball and Packaging Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ball 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 Ball Corporation 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.