Correlation Between International Paper and Berry Global

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

By analyzing existing cross correlation between International Paper and Berry Global Group, you can compare the effects of market volatilities on International Paper and Berry Global 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 International Paper with a short position of Berry Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Berry Global.

Diversification Opportunities for International Paper and Berry Global

0.88

Correlation Coefficient

International Paper  Berry Global

Very poor diversification

The 3 months correlation between International and Berry is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Berry Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berry Global Group and International Paper 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 International Paper are associated (or correlated) with Berry Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berry Global Group has no effect on the direction of International Paper i.e., International Paper and Berry Global go up and down completely randomly.

Pair Corralation between International Paper and Berry Global

Allowing for the 90-day total investment horizon International Paper is expected to generate 1.62 times more return on investment than Berry Global. However, International Paper is 1.62 times more volatile than Berry Global Group. It trades about 0.17 of its potential returns per unit of risk. Berry Global Group is currently generating about 0.17 per unit of risk. If you would invest  4,693  in International Paper on September 4, 2024 and sell it today you would earn a total of  1,153  from holding International Paper or generate 24.57% return on investment over 90 days.

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

International Paper  vs.  Berry Global Group

International Paper

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Paper are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, International Paper reported solid returns over the last few months and may actually be approaching a breakup point.

Berry Global Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berry Global Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Berry Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Paper and Berry Global

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

The idea behind International Paper and Berry Global Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.