Correlation Between Sealed Air and Ebro Foods

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

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

Diversification Opportunities for Sealed Air and Ebro Foods

0.82

Correlation Coefficient

Sealed Air  Ebro Foods

Very poor diversification

The 3 months correlation between Sealed and Ebro is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 Corp are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of Sealed Air i.e., Sealed Air and Ebro Foods go up and down completely randomly.

Pair Corralation between Sealed Air and Ebro Foods

Assuming the 90 days trading horizon Sealed Air Corp is expected to generate 2.64 times more return on investment than Ebro Foods. However, Sealed Air is 2.64 times more volatile than Ebro Foods. It trades about 0.18 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.09 per unit of risk. If you would invest  2,720  in Sealed Air Corp on April 25, 2025 and sell it today you would earn a total of  436.00  from holding Sealed Air Corp or generate 16.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	80.65%
Values	Daily Returns

Sealed Air Corp  vs.  Ebro Foods

Sealed Air Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sealed Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ebro Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ebro Foods is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sealed Air and Ebro Foods

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

The idea behind Sealed Air Corp and Ebro Foods 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.