Correlation Between O I and Packaging Corp

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

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

Diversification Opportunities for O I and Packaging Corp

0.22

Correlation Coefficient

O I  Packaging Corp

Modest diversification

The 3 months correlation between O I and Packaging is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding O I Glass and Packaging Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging Corp and O I 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 O I Glass are associated (or correlated) with Packaging Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging Corp has no effect on the direction of O I i.e., O I and Packaging Corp go up and down completely randomly.

Pair Corralation between O I and Packaging Corp

Allowing for the 90-day total investment horizon O I Glass is expected to generate 1.45 times more return on investment than Packaging Corp. However, O I is 1.45 times more volatile than Packaging Corp of. It trades about -0.07 of its potential returns per unit of risk. Packaging Corp of is currently generating about -0.17 per unit of risk. If you would invest  1,260  in O I Glass on November 28, 2024 and sell it today you would lose (126.00) from holding O I Glass or give up 10.0% of portfolio value over 90 days.

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

O I Glass  vs.  Packaging Corp of

O I Glass

Risk-Adjusted Performance

Very Weak

Over the last 90 days O I Glass has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Packaging Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Packaging Corp of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with O I and Packaging Corp

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

The idea behind O I Glass and Packaging Corp of 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.