Correlation Between Pactiv Evergreen and O I

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

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

Diversification Opportunities for Pactiv Evergreen and O I

0.27

Correlation Coefficient

Pactiv Evergreen  O I

Modest diversification

The 3 months correlation between Pactiv and O I is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pactiv Evergreen and O I Glass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O I Glass and Pactiv Evergreen 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 Pactiv Evergreen are associated (or correlated) with O I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O I Glass has no effect on the direction of Pactiv Evergreen i.e., Pactiv Evergreen and O I go up and down completely randomly.

Pair Corralation between Pactiv Evergreen and O I

Given the investment horizon of 90 days Pactiv Evergreen is expected to generate 0.83 times more return on investment than O I. However, Pactiv Evergreen is 1.2 times less risky than O I. It trades about 0.13 of its potential returns per unit of risk. O I Glass is currently generating about 0.02 per unit of risk. If you would invest  1,135  in Pactiv Evergreen on September 4, 2024 and sell it today you would earn a total of  225.00  from holding Pactiv Evergreen or generate 19.82% return on investment over 90 days.

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

Pactiv Evergreen  vs.  O I Glass

Pactiv Evergreen

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pactiv Evergreen are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pactiv Evergreen exhibited solid returns over the last few months and may actually be approaching a breakup point.

O I Glass

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in O I Glass are ranked lower than 1 (%) 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.

Pair Trading with Pactiv Evergreen and O I

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

The idea behind Pactiv Evergreen and O I Glass 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.