Correlation Between Sonoco Products and Ardagh Metal

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Can any of the company-specific risk be diversified away by investing in both Sonoco Products and Ardagh Metal 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 Sonoco Products and Ardagh Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonoco Products and Ardagh Metal Packaging, you can compare the effects of market volatilities on Sonoco Products and Ardagh Metal 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 Sonoco Products with a short position of Ardagh Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonoco Products and Ardagh Metal.

Diversification Opportunities for Sonoco Products and Ardagh Metal

SonocoArdaghDiversified AwaySonocoArdaghDiversified Away100%
0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sonoco and Ardagh is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sonoco Products and Ardagh Metal Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Metal Packaging and Sonoco Products 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 Sonoco Products are associated (or correlated) with Ardagh Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Metal Packaging has no effect on the direction of Sonoco Products i.e., Sonoco Products and Ardagh Metal go up and down completely randomly.

Pair Corralation between Sonoco Products and Ardagh Metal

Considering the 90-day investment horizon Sonoco Products is expected to generate 0.52 times more return on investment than Ardagh Metal. However, Sonoco Products is 1.92 times less risky than Ardagh Metal. It trades about -0.13 of its potential returns per unit of risk. Ardagh Metal Packaging is currently generating about -0.14 per unit of risk. If you would invest  5,268  in Sonoco Products on October 6, 2024 and sell it today you would lose (473.00) from holding Sonoco Products or give up 8.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Sonoco Products  vs.  Ardagh Metal Packaging

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-15-10-50510
JavaScript chart by amCharts 3.21.15SON AMBP
       Timeline  
Sonoco Products 

Risk-Adjusted Performance

0 of 100

 
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Very Weak
Over the last 90 days Sonoco Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan48495051525354
Ardagh Metal Packaging 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ardagh Metal Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan33.23.43.63.844.2

Sonoco Products and Ardagh Metal Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.88-1.44-1.0-0.56-0.120.240.681.121.56 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15SON AMBP
       Returns  

Pair Trading with Sonoco Products and Ardagh Metal

The main advantage of trading using opposite Sonoco Products and Ardagh Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonoco Products position performs unexpectedly, Ardagh Metal 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 Ardagh Metal will offset losses from the drop in Ardagh Metal's long position.
The idea behind Sonoco Products and Ardagh Metal Packaging 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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