Correlation Between CCL Industries and Keg Royalties

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

By analyzing existing cross correlation between CCL Industries and The Keg Royalties, you can compare the effects of market volatilities on CCL Industries and Keg Royalties 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 CCL Industries with a short position of Keg Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Keg Royalties.

Diversification Opportunities for CCL Industries and Keg Royalties

0.9

Correlation Coefficient

CCL Industries  Keg Royalties

Almost no diversification

The 3 months correlation between CCL and Keg is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties and CCL Industries 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 CCL Industries are associated (or correlated) with Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of CCL Industries i.e., CCL Industries and Keg Royalties go up and down completely randomly.

Pair Corralation between CCL Industries and Keg Royalties

Assuming the 90 days trading horizon CCL Industries is expected to generate 2.07 times less return on investment than Keg Royalties. But when comparing it to its historical volatility, CCL Industries is 2.89 times less risky than Keg Royalties. It trades about 0.21 of its potential returns per unit of risk. The Keg Royalties is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,381  in The Keg Royalties on April 23, 2025 and sell it today you would earn a total of  481.00  from holding The Keg Royalties or generate 34.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

CCL Industries  vs.  The Keg Royalties

CCL Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CCL Industries are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CCL Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Keg Royalties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Keg Royalties are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Keg Royalties sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CCL Industries and Keg Royalties

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

The idea behind CCL Industries and The Keg Royalties 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.