Correlation Between Crown Holdings and Packagingof America

Can any of the company-specific risk be diversified away by investing in both Crown Holdings and Packagingof America 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 Packagingof America 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 Packagingof America 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 Packagingof America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Holdings and Packagingof America.

Diversification Opportunities for Crown Holdings and Packagingof America

0.08

Correlation Coefficient

Crown Holdings  Packagingof America

Significant diversification

The 3 months correlation between Crown and Packagingof is 0.08. 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 Packagingof America 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 Packagingof America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packagingof America has no effect on the direction of Crown Holdings i.e., Crown Holdings and Packagingof America go up and down completely randomly.

Pair Corralation between Crown Holdings and Packagingof America

Assuming the 90 days horizon Crown Holdings is expected to generate 8.2 times less return on investment than Packagingof America. In addition to that, Crown Holdings is 1.27 times more volatile than Packaging of. It trades about 0.01 of its total potential returns per unit of risk. Packaging of is currently generating about 0.1 per unit of volatility. If you would invest  11,336  in Packaging of on October 9, 2024 and sell it today you would earn a total of  10,434  from holding Packaging of or generate 92.04% return on investment over 90 days.

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

Crown Holdings  vs.  Packaging of

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crown Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Packagingof America

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Packagingof America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Crown Holdings and Packagingof America

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

The idea behind Crown Holdings and Packaging of 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.