Correlation Between Sealed Air and Braskem SA
Can any of the company-specific risk be diversified away by investing in both Sealed Air and Braskem SA 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 Braskem SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Braskem SA Class, you can compare the effects of market volatilities on Sealed Air and Braskem SA 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 Braskem SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Braskem SA.
Diversification Opportunities for Sealed Air and Braskem SA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sealed and Braskem is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Braskem SA Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA Class 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 Braskem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braskem SA Class has no effect on the direction of Sealed Air i.e., Sealed Air and Braskem SA go up and down completely randomly.
Pair Corralation between Sealed Air and Braskem SA
Considering the 90-day investment horizon Sealed Air is expected to under-perform the Braskem SA. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 2.19 times less risky than Braskem SA. The stock trades about -0.12 of its potential returns per unit of risk. The Braskem SA Class is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 380.00 in Braskem SA Class on December 27, 2024 and sell it today you would earn a total of 28.00 from holding Braskem SA Class or generate 7.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sealed Air vs. Braskem SA Class
Performance |
Timeline |
Sealed Air |
Braskem SA Class |
Sealed Air and Braskem SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sealed Air and Braskem SA
The main advantage of trading using opposite Sealed Air and Braskem SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Braskem SA 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 Braskem SA will offset losses from the drop in Braskem SA'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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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