Correlation Between Graphic Packaging and Silgan Holdings

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

Diversification Opportunities for Graphic Packaging and Silgan Holdings

-0.03

Correlation Coefficient

Graphic Packaging  Silgan Holdings

Good diversification

The 3 months correlation between Graphic and Silgan is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Silgan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgan Holdings 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 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 Graphic Packaging i.e., Graphic Packaging and Silgan Holdings go up and down completely randomly.

Pair Corralation between Graphic Packaging and Silgan Holdings

Considering the 90-day investment horizon Graphic Packaging is expected to generate 3.28 times less return on investment than Silgan Holdings. In addition to that, Graphic Packaging is 1.4 times more volatile than Silgan Holdings. It trades about 0.04 of its total potential returns per unit of risk. Silgan Holdings is currently generating about 0.18 per unit of volatility. If you would invest  5,126  in Silgan Holdings on September 2, 2024 and sell it today you would earn a total of  627.00  from holding Silgan Holdings or generate 12.23% return on investment over 90 days.

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

Graphic Packaging Holding  vs.  Silgan Holdings

Graphic Packaging Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Graphic Packaging Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Graphic Packaging is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Silgan Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silgan Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Silgan Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Graphic Packaging and Silgan Holdings

The main advantage of trading using opposite Graphic Packaging and Silgan Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphic Packaging 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 Graphic Packaging Holding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.