Correlation Between SEALED AIR and American Tower

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

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

Diversification Opportunities for SEALED AIR and American Tower

0.5

Correlation Coefficient

SEALED AIR  American Tower

Very weak diversification

The 3 months correlation between SEALED and American is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and American Tower Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower Corp and SEALED AIR 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 SEALED AIR are associated (or correlated) with American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower Corp has no effect on the direction of SEALED AIR i.e., SEALED AIR and American Tower go up and down completely randomly.

Pair Corralation between SEALED AIR and American Tower

Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.9 times more return on investment than American Tower. However, SEALED AIR is 1.11 times less risky than American Tower. It trades about 0.0 of its potential returns per unit of risk. American Tower Corp is currently generating about -0.1 per unit of risk. If you would invest  3,361  in SEALED AIR on October 21, 2024 and sell it today you would lose (21.00) from holding SEALED AIR or give up 0.62% of portfolio value over 90 days.

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

SEALED AIR   vs.  American Tower Corp

SEALED AIR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEALED AIR 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.

American Tower Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Tower Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SEALED AIR and American Tower

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

The idea behind SEALED AIR and American Tower 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.