Correlation Between Crown Holdings and Amcor PLC

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

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

Diversification Opportunities for Crown Holdings and Amcor PLC

0.73

Correlation Coefficient

Crown Holdings  Amcor PLC

Poor diversification

The 3 months correlation between Crown and Amcor is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and Amcor PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor PLC and Crown Holdings 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 Crown Holdings are associated (or correlated) with Amcor PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor PLC has no effect on the direction of Crown Holdings i.e., Crown Holdings and Amcor PLC go up and down completely randomly.

Pair Corralation between Crown Holdings and Amcor PLC

Considering the 90-day investment horizon Crown Holdings is expected to generate 1.15 times more return on investment than Amcor PLC. However, Crown Holdings is 1.15 times more volatile than Amcor PLC. It trades about 0.11 of its potential returns per unit of risk. Amcor PLC is currently generating about 0.07 per unit of risk. If you would invest  8,165  in Crown Holdings on December 28, 2024 and sell it today you would earn a total of  818.00  from holding Crown Holdings or generate 10.02% return on investment over 90 days.

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

Crown Holdings  vs.  Amcor PLC

Crown Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Crown Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Amcor PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amcor PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Amcor PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Crown Holdings and Amcor PLC

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

The idea behind Crown Holdings and Amcor PLC 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.