Correlation Between Siriuspoint and Ardagh

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

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

Diversification Opportunities for Siriuspoint and Ardagh

-0.05

Correlation Coefficient

Siriuspoint  Ardagh

Good diversification

The 3 months correlation between Siriuspoint and Ardagh is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Siriuspoint and Ardagh Packaging Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Packaging Finance and Siriuspoint 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 Siriuspoint are associated (or correlated) with Ardagh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Packaging Finance has no effect on the direction of Siriuspoint i.e., Siriuspoint and Ardagh go up and down completely randomly.

Pair Corralation between Siriuspoint and Ardagh

Given the investment horizon of 90 days Siriuspoint is expected to under-perform the Ardagh. But the stock apears to be less risky and, when comparing its historical volatility, Siriuspoint is 5.18 times less risky than Ardagh. The stock trades about -0.02 of its potential returns per unit of risk. The Ardagh Packaging Finance is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,626  in Ardagh Packaging Finance on October 10, 2024 and sell it today you would earn a total of  174.00  from holding Ardagh Packaging Finance or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.0%
Values	Daily Returns

Siriuspoint  vs.  Ardagh Packaging Finance

Siriuspoint

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ardagh Packaging Finance

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ardagh Packaging Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Ardagh Packaging Finance investors.

Pair Trading with Siriuspoint and Ardagh

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

The idea behind Siriuspoint and Ardagh Packaging Finance 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.