Correlation Between Sealed Air and KVH Industries

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

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

Diversification Opportunities for Sealed Air and KVH Industries

0.69

Correlation Coefficient

Sealed Air  KVH Industries

Poor diversification

The 3 months correlation between Sealed and KVH is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Sealed Air i.e., Sealed Air and KVH Industries go up and down completely randomly.

Pair Corralation between Sealed Air and KVH Industries

Considering the 90-day investment horizon Sealed Air is expected to under-perform the KVH Industries. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 1.08 times less risky than KVH Industries. The stock trades about -0.14 of its potential returns per unit of risk. The KVH Industries is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  578.00  in KVH Industries on December 17, 2024 and sell it today you would lose (49.00) from holding KVH Industries or give up 8.48% of portfolio value over 90 days.

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

Sealed Air  vs.  KVH Industries

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

KVH Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days KVH Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Sealed Air and KVH Industries

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

The idea behind Sealed Air and KVH Industries 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.