Correlation Between Packaging Corp and Greif Bros

Can any of the company-specific risk be diversified away by investing in both Packaging Corp and Greif Bros 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 Greif Bros 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 Greif Bros, you can compare the effects of market volatilities on Packaging Corp and Greif Bros 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 Greif Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packaging Corp and Greif Bros.

Diversification Opportunities for Packaging Corp and Greif Bros

0.68

Correlation Coefficient

Packaging Corp  Greif Bros

Poor diversification

The 3 months correlation between Packaging and Greif is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Packaging Corp of and Greif Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greif Bros 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 Greif Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greif Bros has no effect on the direction of Packaging Corp i.e., Packaging Corp and Greif Bros go up and down completely randomly.

Pair Corralation between Packaging Corp and Greif Bros

Considering the 90-day investment horizon Packaging Corp of is expected to under-perform the Greif Bros. In addition to that, Packaging Corp is 2.0 times more volatile than Greif Bros. It trades about -0.26 of its total potential returns per unit of risk. Greif Bros is currently generating about -0.11 per unit of volatility. If you would invest  6,245  in Greif Bros on November 28, 2024 and sell it today you would lose (177.00) from holding Greif Bros or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Packaging Corp of  vs.  Greif Bros

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.

Greif Bros

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greif Bros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators 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 Packaging Corp and Greif Bros

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

The idea behind Packaging Corp of and Greif Bros 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.