Correlation Between Sealed Air and OCCIDENTAL

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

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

Diversification Opportunities for Sealed Air and OCCIDENTAL

-0.17

Correlation Coefficient

Sealed Air  OCCIDENTAL

Good diversification

The 3 months correlation between Sealed and OCCIDENTAL is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and OCCIDENTAL PETE P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCCIDENTAL PETE P 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 OCCIDENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCCIDENTAL PETE P has no effect on the direction of Sealed Air i.e., Sealed Air and OCCIDENTAL go up and down completely randomly.

Pair Corralation between Sealed Air and OCCIDENTAL

Considering the 90-day investment horizon Sealed Air is expected to under-perform the OCCIDENTAL. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 1.25 times less risky than OCCIDENTAL. The stock trades about -0.02 of its potential returns per unit of risk. The OCCIDENTAL PETE P is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,000  in OCCIDENTAL PETE P on September 14, 2024 and sell it today you would lose (303.00) from holding OCCIDENTAL PETE P or give up 3.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	58.7%
Values	Daily Returns

Sealed Air  vs.  OCCIDENTAL PETE P

Sealed Air

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Sealed Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

OCCIDENTAL PETE P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCCIDENTAL PETE P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, OCCIDENTAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sealed Air and OCCIDENTAL

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

The idea behind Sealed Air and OCCIDENTAL PETE P 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.