Correlation Between Crown Holdings and Silgan Holdings

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

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

Diversification Opportunities for Crown Holdings and Silgan Holdings

0.86

Correlation Coefficient

Crown Holdings  Silgan Holdings

Very poor diversification

The 3 months correlation between Crown and Silgan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and Silgan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgan Holdings 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 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 Crown Holdings i.e., Crown Holdings and Silgan Holdings go up and down completely randomly.

Pair Corralation between Crown Holdings and Silgan Holdings

Considering the 90-day investment horizon Crown Holdings is expected to generate 1.06 times more return on investment than Silgan Holdings. However, Crown Holdings is 1.06 times more volatile than Silgan Holdings. It trades about 0.02 of its potential returns per unit of risk. Silgan Holdings is currently generating about 0.02 per unit of risk. If you would invest  7,881  in Crown Holdings on December 2, 2024 and sell it today you would earn a total of  1,082  from holding Crown Holdings or generate 13.73% return on investment over 90 days.

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

Crown Holdings  vs.  Silgan Holdings

Crown Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Crown Holdings 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 Crown Holdings and Silgan Holdings

The main advantage of trading using opposite Crown Holdings and Silgan Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Holdings 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 Crown Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..