Correlation Between Berry Global and Sonoco Products

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

By analyzing existing cross correlation between Berry Global Group and Sonoco Products, you can compare the effects of market volatilities on Berry Global and Sonoco Products 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 Berry Global with a short position of Sonoco Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berry Global and Sonoco Products.

Diversification Opportunities for Berry Global and Sonoco Products

-0.39

Correlation Coefficient

Berry Global  Sonoco Products

Very good diversification

The 3 months correlation between Berry and Sonoco is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Berry Global Group and Sonoco Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoco Products and Berry Global 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 Berry Global Group are associated (or correlated) with Sonoco Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoco Products has no effect on the direction of Berry Global i.e., Berry Global and Sonoco Products go up and down completely randomly.

Pair Corralation between Berry Global and Sonoco Products

Given the investment horizon of 90 days Berry Global Group is expected to generate 0.89 times more return on investment than Sonoco Products. However, Berry Global Group is 1.13 times less risky than Sonoco Products. It trades about 0.12 of its potential returns per unit of risk. Sonoco Products is currently generating about -0.02 per unit of risk. If you would invest  6,392  in Berry Global Group on December 28, 2024 and sell it today you would earn a total of  607.00  from holding Berry Global Group or generate 9.5% return on investment over 90 days.

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

Berry Global Group  vs.  Sonoco Products

Berry Global Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berry Global Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Berry Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sonoco Products

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Berry Global and Sonoco Products

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

The idea behind Berry Global Group and Sonoco Products 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.