Correlation Between Crown Holdings and Packaging
Can any of the company-specific risk be diversified away by investing in both Crown Holdings and Packaging 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 Packaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Holdings and Packaging of, you can compare the effects of market volatilities on Crown Holdings and Packaging 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 Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Holdings and Packaging.
Diversification Opportunities for Crown Holdings and Packaging
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Crown and Packaging is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and Packaging of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging 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 Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging has no effect on the direction of Crown Holdings i.e., Crown Holdings and Packaging go up and down completely randomly.
Pair Corralation between Crown Holdings and Packaging
Assuming the 90 days horizon Crown Holdings is expected to under-perform the Packaging. In addition to that, Crown Holdings is 1.54 times more volatile than Packaging of. It trades about -0.59 of its total potential returns per unit of risk. Packaging of is currently generating about -0.6 per unit of volatility. If you would invest 23,356 in Packaging of on September 25, 2024 and sell it today you would lose (1,666) from holding Packaging of or give up 7.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Crown Holdings vs. Packaging of
Performance |
Timeline |
Crown Holdings |
Packaging |
Crown Holdings and Packaging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Crown Holdings and Packaging
The main advantage of trading using opposite Crown Holdings and Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Holdings position performs unexpectedly, Packaging 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 will offset losses from the drop in Packaging's long position.Crown Holdings vs. Amcor plc | Crown Holdings vs. Amcor plc | Crown Holdings vs. Packaging of | Crown Holdings vs. Smurfit Kappa Group |
Packaging vs. Amcor plc | Packaging vs. Amcor plc | Packaging vs. Crown Holdings | Packaging vs. Smurfit Kappa Group |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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