Correlation Between Packaging Corp and Crown Holdings

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

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

Diversification Opportunities for Packaging Corp and Crown Holdings

-0.57

Correlation Coefficient

Packaging Corp  Crown Holdings

Excellent diversification

The 3 months correlation between Packaging and Crown is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Packaging Corp of and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Packaging Corp 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 Packaging Corp of are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Packaging Corp i.e., Packaging Corp and Crown Holdings go up and down completely randomly.

Pair Corralation between Packaging Corp and Crown Holdings

Considering the 90-day investment horizon Packaging Corp of is expected to under-perform the Crown Holdings. In addition to that, Packaging Corp is 1.21 times more volatile than Crown Holdings. It trades about -0.1 of its total potential returns per unit of risk. Crown Holdings is currently generating about 0.11 per unit of volatility. If you would invest  8,165  in Crown Holdings on December 29, 2024 and sell it today you would earn a total of  818.00  from holding Crown Holdings or generate 10.02% return on investment over 90 days.

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

Packaging Corp of  vs.  Crown Holdings

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 latest weak performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Crown Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Crown Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Packaging Corp and Crown Holdings

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

The idea behind Packaging Corp of and Crown 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.