Correlation Between Sealed Air and Marine Products

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

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

Diversification Opportunities for Sealed Air and Marine Products

0.84

Correlation Coefficient

Sealed Air  Marine Products

Very poor diversification

The 3 months correlation between Sealed and Marine is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Sealed Air i.e., Sealed Air and Marine Products go up and down completely randomly.

Pair Corralation between Sealed Air and Marine Products

Considering the 90-day investment horizon Sealed Air is expected to under-perform the Marine Products. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 1.24 times less risky than Marine Products. The stock trades about -0.12 of its potential returns per unit of risk. The Marine Products is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  968.00  in Marine Products on December 4, 2024 and sell it today you would lose (120.00) from holding Marine Products or give up 12.4% of portfolio value over 90 days.

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

Sealed Air  vs.  Marine Products

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.

Marine Products

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sealed Air and Marine Products

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

The idea behind Sealed Air and Marine Products 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.