Correlation Between Graphic Packaging and Sealed Air

Can any of the company-specific risk be diversified away by investing in both Graphic Packaging and Sealed Air 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 Sealed Air 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 Sealed Air, you can compare the effects of market volatilities on Graphic Packaging and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphic Packaging and Sealed Air.

Diversification Opportunities for Graphic Packaging and Sealed Air

0.16

Correlation Coefficient

Graphic Packaging  Sealed Air

Average diversification

The 3 months correlation between Graphic and Sealed is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Graphic Packaging i.e., Graphic Packaging and Sealed Air go up and down completely randomly.

Pair Corralation between Graphic Packaging and Sealed Air

Considering the 90-day investment horizon Graphic Packaging is expected to generate 5.6 times less return on investment than Sealed Air. But when comparing it to its historical volatility, Graphic Packaging Holding is 1.31 times less risky than Sealed Air. It trades about 0.03 of its potential returns per unit of risk. Sealed Air is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,567  in Sealed Air on September 12, 2024 and sell it today you would earn a total of  117.00  from holding Sealed Air or generate 3.28% return on investment over 90 days.

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

Graphic Packaging Holding  vs.  Sealed Air

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.

Sealed Air

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Sealed Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Graphic Packaging and Sealed Air

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

The idea behind Graphic Packaging Holding and Sealed Air 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.