Correlation Between Sealed Air and ChampionX

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

Diversification Opportunities for Sealed Air and ChampionX

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Sealed and ChampionX is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Sealed Air i.e., Sealed Air and ChampionX go up and down completely randomly.

Pair Corralation between Sealed Air and ChampionX

Considering the 90-day investment horizon Sealed Air is expected to generate 1.0 times more return on investment than ChampionX. However, Sealed Air is 1.0 times less risky than ChampionX. It trades about -0.19 of its potential returns per unit of risk. ChampionX is currently generating about -0.62 per unit of risk. If you would invest  3,570  in Sealed Air on September 23, 2024 and sell it today you would lose (211.00) from holding Sealed Air or give up 5.91% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sealed Air  vs.  ChampionX

 Performance 
       Timeline  
Sealed Air 

Risk-Adjusted Performance

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Weak
 
Strong
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 rather sound technical and fundamental indicators, Sealed Air is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
ChampionX 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sealed Air and ChampionX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sealed Air and ChampionX

The main advantage of trading using opposite Sealed Air and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.
The idea behind Sealed Air and ChampionX 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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