Correlation Between Crown Holdings and Greif Bros

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Can any of the company-specific risk be diversified away by investing in both Crown 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 Crown 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 Crown Holdings and Greif Bros, you can compare the effects of market volatilities on Crown 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 Crown Holdings with a short position of Greif Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Holdings and Greif Bros.

Diversification Opportunities for Crown Holdings and Greif Bros

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Crown and Greif is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Crown Holdings and Greif Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greif Bros and Crown 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 Crown 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 Crown Holdings i.e., Crown Holdings and Greif Bros go up and down completely randomly.

Pair Corralation between Crown Holdings and Greif Bros

Considering the 90-day investment horizon Crown Holdings is expected to generate 6.34 times less return on investment than Greif Bros. But when comparing it to its historical volatility, Crown Holdings is 1.4 times less risky than Greif Bros. It trades about 0.07 of its potential returns per unit of risk. Greif Bros is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  6,143  in Greif Bros on December 29, 2023 and sell it today you would earn a total of  711.00  from holding Greif Bros or generate 11.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Crown Holdings  vs.  Greif Bros

 Performance 
       Timeline  
Crown Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Greif Bros 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Greif Bros are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Greif Bros is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Crown Holdings and Greif Bros Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Crown Holdings and Greif Bros

The main advantage of trading using opposite Crown Holdings and Greif Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown 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 Crown 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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