Correlation Between Graphic Packaging and Greif Bros

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

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

Diversification Opportunities for Graphic Packaging and Greif Bros

0.77

Correlation Coefficient

Graphic Packaging  Greif Bros

Poor diversification

The 3 months correlation between Graphic and Greif is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Greif Bros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greif Bros and Graphic Packaging 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 Graphic Packaging Holding 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 Graphic Packaging i.e., Graphic Packaging and Greif Bros go up and down completely randomly.

Pair Corralation between Graphic Packaging and Greif Bros

Considering the 90-day investment horizon Graphic Packaging Holding is expected to generate 1.11 times more return on investment than Greif Bros. However, Graphic Packaging is 1.11 times more volatile than Greif Bros. It trades about 0.08 of its potential returns per unit of risk. Greif Bros is currently generating about -0.06 per unit of risk. If you would invest  2,524  in Graphic Packaging Holding on January 20, 2024 and sell it today you would earn a total of  197.00  from holding Graphic Packaging Holding or generate 7.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Graphic Packaging Holding  vs.  Greif Bros

Graphic Packaging Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graphic Packaging Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Graphic Packaging may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Greif Bros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greif Bros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greif Bros is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Graphic Packaging and Greif Bros

The main advantage of trading using opposite Graphic Packaging and Greif Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphic Packaging 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 Graphic Packaging Holding 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.