Correlation Between Sealed Air and Eureka Acquisition

Can any of the company-specific risk be diversified away by investing in both Sealed Air and Eureka Acquisition 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 Eureka Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sealed Air and Eureka Acquisition Corp, you can compare the effects of market volatilities on Sealed Air and Eureka Acquisition 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 Eureka Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Eureka Acquisition.

Diversification Opportunities for Sealed Air and Eureka Acquisition

-0.3

Correlation Coefficient

Sealed Air  Eureka Acquisition

Very good diversification

The 3 months correlation between Sealed and Eureka is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Eureka Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Acquisition 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 Eureka Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Acquisition Corp has no effect on the direction of Sealed Air i.e., Sealed Air and Eureka Acquisition go up and down completely randomly.

Pair Corralation between Sealed Air and Eureka Acquisition

Considering the 90-day investment horizon Sealed Air is expected to under-perform the Eureka Acquisition. In addition to that, Sealed Air is 22.67 times more volatile than Eureka Acquisition Corp. It trades about -0.33 of its total potential returns per unit of risk. Eureka Acquisition Corp is currently generating about 0.18 per unit of volatility. If you would invest  1,014  in Eureka Acquisition Corp on October 10, 2024 and sell it today you would earn a total of  2.00  from holding Eureka Acquisition Corp or generate 0.2% return on investment over 90 days.

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

Sealed Air  vs.  Eureka Acquisition 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 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.

Eureka Acquisition Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Acquisition Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Eureka Acquisition is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sealed Air and Eureka Acquisition

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

The idea behind Sealed Air and Eureka Acquisition 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.