Correlation Between Silgan Holdings and Greif Bros

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

By analyzing existing cross correlation between Silgan Holdings and Greif Bros, you can compare the effects of market volatilities on Silgan Holdings and Greif Bros 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 Silgan Holdings with a short position of Greif Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silgan Holdings and Greif Bros.

Diversification Opportunities for Silgan Holdings and Greif Bros

0.64

Correlation Coefficient

Silgan Holdings  Greif Bros

Poor diversification

The 3 months correlation between Silgan and Greif is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Silgan Holdings and Greif Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greif Bros and Silgan Holdings 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 Silgan Holdings are associated (or correlated) with Greif Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greif Bros has no effect on the direction of Silgan Holdings i.e., Silgan Holdings and Greif Bros go up and down completely randomly.

Pair Corralation between Silgan Holdings and Greif Bros

Given the investment horizon of 90 days Silgan Holdings is expected to generate 0.96 times more return on investment than Greif Bros. However, Silgan Holdings is 1.04 times less risky than Greif Bros. It trades about 0.01 of its potential returns per unit of risk. Greif Bros is currently generating about 0.0 per unit of risk. If you would invest  5,078  in Silgan Holdings on December 28, 2024 and sell it today you would lose (8.00) from holding Silgan Holdings or give up 0.16% of portfolio value over 90 days.

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

Silgan Holdings  vs.  Greif Bros

Silgan Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Silgan Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Silgan Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Greif Bros

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greif Bros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Silgan Holdings and Greif Bros

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

The idea behind Silgan Holdings and Greif Bros 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.