Correlation Between Valhi and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Valhi and Sealed Air 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 Valhi and Sealed Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valhi Inc and Sealed Air, you can compare the effects of market volatilities on Valhi and Sealed Air 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 Valhi with a short position of Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valhi and Sealed Air.
Diversification Opportunities for Valhi and Sealed Air
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Valhi and Sealed is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Valhi Inc and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air and Valhi 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 Valhi Inc are associated (or correlated) with Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Valhi i.e., Valhi and Sealed Air go up and down completely randomly.
Pair Corralation between Valhi and Sealed Air
Considering the 90-day investment horizon Valhi Inc is expected to generate 1.77 times more return on investment than Sealed Air. However, Valhi is 1.77 times more volatile than Sealed Air. It trades about 0.02 of its potential returns per unit of risk. Sealed Air is currently generating about -0.03 per unit of risk. If you would invest 2,233 in Valhi Inc on September 29, 2024 and sell it today you would lose (6.00) from holding Valhi Inc or give up 0.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Valhi Inc vs. Sealed Air
Performance |
Timeline |
Valhi Inc |
Sealed Air |
Valhi and Sealed Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Valhi and Sealed Air
The main advantage of trading using opposite Valhi and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valhi position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.Valhi vs. Huntsman | Valhi vs. Lsb Industries | Valhi vs. Westlake Chemical Partners | Valhi vs. Green Plains Renewable |
Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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