Correlation Between River and Sealed Air

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

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

Diversification Opportunities for River and Sealed Air

-0.02

Correlation Coefficient

River  Sealed Air

Good diversification

The 3 months correlation between River and Sealed is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding River and Mercantile and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp and River 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 River and Mercantile 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 Corp has no effect on the direction of River i.e., River and Sealed Air go up and down completely randomly.

Pair Corralation between River and Sealed Air

Assuming the 90 days trading horizon River and Mercantile is expected to under-perform the Sealed Air. But the stock apears to be less risky and, when comparing its historical volatility, River and Mercantile is 7.16 times less risky than Sealed Air. The stock trades about -0.15 of its potential returns per unit of risk. The Sealed Air Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,354  in Sealed Air Corp on October 22, 2024 and sell it today you would earn a total of  117.00  from holding Sealed Air Corp or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

River and Mercantile  vs.  Sealed Air Corp

River and Mercantile

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in River and Mercantile are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, River is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sealed Air Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sealed Air Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sealed Air is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with River and Sealed Air

The main advantage of trading using opposite River and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River 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 River and Mercantile and Sealed Air Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.