Correlation Between Sealed Air and Ivanhoe Electric

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

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

Diversification Opportunities for Sealed Air and Ivanhoe Electric

0.54

Correlation Coefficient

Sealed Air  Ivanhoe Electric

Very weak diversification

The 3 months correlation between Sealed and Ivanhoe is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Ivanhoe Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Electric 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 Ivanhoe Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Electric has no effect on the direction of Sealed Air i.e., Sealed Air and Ivanhoe Electric go up and down completely randomly.

Pair Corralation between Sealed Air and Ivanhoe Electric

Considering the 90-day investment horizon Sealed Air is expected to under-perform the Ivanhoe Electric. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 2.16 times less risky than Ivanhoe Electric. The stock trades about -0.11 of its potential returns per unit of risk. The Ivanhoe Electric is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  692.00  in Ivanhoe Electric on December 19, 2024 and sell it today you would lose (72.00) from holding Ivanhoe Electric or give up 10.4% 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.  Ivanhoe Electric

Sealed Air

Risk-Adjusted Performance

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 latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Ivanhoe Electric

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ivanhoe Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Sealed Air and Ivanhoe Electric

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

The idea behind Sealed Air and Ivanhoe Electric 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.