Correlation Between Ball and Silgan Holdings

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

Diversification Opportunities for Ball and Silgan Holdings

0.06

Correlation Coefficient

Ball  Silgan Holdings

Significant diversification

The 3 months correlation between Ball and Silgan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ball Corp. and Silgan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgan 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 Silgan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgan Holdings has no effect on the direction of Ball i.e., Ball and Silgan Holdings go up and down completely randomly.

Pair Corralation between Ball and Silgan Holdings

Given the investment horizon of 90 days Ball Corporation is expected to under-perform the Silgan Holdings. In addition to that, Ball is 1.15 times more volatile than Silgan Holdings. It trades about -0.05 of its total potential returns per unit of risk. Silgan Holdings is currently generating about -0.01 per unit of volatility. If you would invest  5,152  in Silgan Holdings on December 28, 2024 and sell it today you would lose (82.00) from holding Silgan Holdings or give up 1.59% of portfolio value over 90 days.

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

Ball Corp.  vs.  Silgan 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 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.

Silgan Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silgan Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Silgan Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ball and Silgan Holdings

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

The idea behind Ball Corporation and Silgan 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.