Correlation Between Sealed Air and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Axalta Coating 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 Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Axalta Coating Systems, you can compare the effects of market volatilities on Sealed Air and Axalta Coating 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 Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Axalta Coating.
Diversification Opportunities for Sealed Air and Axalta Coating
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and Axalta is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems 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 Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Sealed Air i.e., Sealed Air and Axalta Coating go up and down completely randomly.
Pair Corralation between Sealed Air and Axalta Coating
Considering the 90-day investment horizon Sealed Air is expected to under-perform the Axalta Coating. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 1.08 times less risky than Axalta Coating. The stock trades about -0.1 of its potential returns per unit of risk. The Axalta Coating Systems is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,401 in Axalta Coating Systems on December 28, 2024 and sell it today you would lose (90.00) from holding Axalta Coating Systems or give up 2.65% 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. Axalta Coating Systems
Performance |
Timeline |
Sealed Air |
Axalta Coating Systems |
Sealed Air and Axalta Coating Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sealed Air and Axalta Coating
The main advantage of trading using opposite Sealed Air and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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