Correlation Between LBG Media and Sealed Air

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

By analyzing existing cross correlation between LBG Media PLC and Sealed Air Corp, you can compare the effects of market volatilities on LBG Media 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 LBG Media with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Sealed Air.

Diversification Opportunities for LBG Media and Sealed Air

-0.36

Correlation Coefficient

LBG Media  Sealed Air

Very good diversification

The 3 months correlation between LBG and Sealed is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp and LBG Media 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 LBG Media PLC 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 Corp has no effect on the direction of LBG Media i.e., LBG Media and Sealed Air go up and down completely randomly.

Pair Corralation between LBG Media and Sealed Air

Assuming the 90 days trading horizon LBG Media PLC is expected to under-perform the Sealed Air. In addition to that, LBG Media is 1.64 times more volatile than Sealed Air Corp. It trades about 0.0 of its total potential returns per unit of risk. Sealed Air Corp is currently generating about 0.07 per unit of volatility. If you would invest  3,464  in Sealed Air Corp on September 3, 2024 and sell it today you would earn a total of  196.00  from holding Sealed Air Corp or generate 5.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.31%
Values	Daily Returns

LBG Media PLC  vs.  Sealed Air Corp

LBG Media PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LBG Media PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, LBG Media is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sealed Air Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sealed Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LBG Media and Sealed Air

The main advantage of trading using opposite LBG Media and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media 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 LBG Media PLC and Sealed Air Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.