Correlation Between SEALED AIR and D R

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Can any of the company-specific risk be diversified away by investing in both SEALED AIR and D R 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 D R into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and D R HORTON, you can compare the effects of market volatilities on SEALED AIR and D R 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 D R. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and D R.

Diversification Opportunities for SEALED AIR and D R

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between SEALED and HO2 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and D R HORTON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D R HORTON 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 D R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D R HORTON has no effect on the direction of SEALED AIR i.e., SEALED AIR and D R go up and down completely randomly.

Pair Corralation between SEALED AIR and D R

Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.68 times more return on investment than D R. However, SEALED AIR is 1.47 times less risky than D R. It trades about -0.24 of its potential returns per unit of risk. D R HORTON is currently generating about -0.33 per unit of risk. If you would invest  3,420  in SEALED AIR on October 10, 2024 and sell it today you would lose (180.00) from holding SEALED AIR or give up 5.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SEALED AIR   vs.  D R HORTON

 Performance 
       Timeline  
SEALED AIR 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SEALED AIR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.
D R HORTON 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days D R HORTON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SEALED AIR and D R Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SEALED AIR and D R

The main advantage of trading using opposite SEALED AIR and D R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR position performs unexpectedly, D R 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 D R will offset losses from the drop in D R's long position.
The idea behind SEALED AIR and D R HORTON 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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