Correlation Between Graphic Packaging and Ball

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

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

Diversification Opportunities for Graphic Packaging and Ball

0.38

Correlation Coefficient

Graphic Packaging  Ball

Weak diversification

The 3 months correlation between Graphic and Ball is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Ball Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ball and Graphic Packaging 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 Graphic Packaging Holding are associated (or correlated) with Ball. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ball has no effect on the direction of Graphic Packaging i.e., Graphic Packaging and Ball go up and down completely randomly.

Pair Corralation between Graphic Packaging and Ball

Considering the 90-day investment horizon Graphic Packaging Holding is expected to generate 0.9 times more return on investment than Ball. However, Graphic Packaging Holding is 1.12 times less risky than Ball. It trades about 0.01 of its potential returns per unit of risk. Ball Corporation is currently generating about -0.12 per unit of risk. If you would invest  2,947  in Graphic Packaging Holding on September 12, 2024 and sell it today you would earn a total of  7.00  from holding Graphic Packaging Holding or generate 0.24% return on investment over 90 days.

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

Graphic Packaging Holding  vs.  Ball Corp.

Graphic Packaging Holding

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Graphic Packaging Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Graphic Packaging is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Ball

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ball Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Graphic Packaging and Ball

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

The idea behind Graphic Packaging Holding and Ball Corporation 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 CEOs Directory module to screen CEOs from public companies around the world.