Correlation Between O I and Sealed Air

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

Diversification Opportunities for O I and Sealed Air

0.1

Correlation Coefficient

O I  Sealed Air

Average diversification

The 3 months correlation between O I and Sealed is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding O I Glass and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 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 O I i.e., O I and Sealed Air go up and down completely randomly.

Pair Corralation between O I and Sealed Air

Allowing for the 90-day total investment horizon O I is expected to generate 1.16 times less return on investment than Sealed Air. In addition to that, O I is 1.77 times more volatile than Sealed Air. It trades about 0.03 of its total potential returns per unit of risk. Sealed Air is currently generating about 0.05 per unit of volatility. If you would invest  3,492  in Sealed Air on September 2, 2024 and sell it today you would earn a total of  168.00  from holding Sealed Air or generate 4.81% return on investment over 90 days.

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

O I Glass  vs.  Sealed Air

O I Glass

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in O I Glass are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, O I is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Sealed Air

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Sealed Air is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with O I and Sealed Air

The main advantage of trading using opposite O I and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if O I 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 O I Glass 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.