Correlation Between International Paper and Ardagh Group

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Can any of the company-specific risk be diversified away by investing in both International Paper and Ardagh Group 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 International Paper and Ardagh Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Paper and Ardagh Group SA, you can compare the effects of market volatilities on International Paper and Ardagh Group 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 International Paper with a short position of Ardagh Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Paper and Ardagh Group.

Diversification Opportunities for International Paper and Ardagh Group

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between International and Ardagh is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and Ardagh Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Group SA and International Paper 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 International Paper are associated (or correlated) with Ardagh Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Group SA has no effect on the direction of International Paper i.e., International Paper and Ardagh Group go up and down completely randomly.

Pair Corralation between International Paper and Ardagh Group

If you would invest  3,389  in International Paper on December 30, 2023 and sell it today you would earn a total of  513.00  from holding International Paper or generate 15.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

International Paper  vs.  Ardagh Group SA

 Performance 
       Timeline  
International Paper 

Risk-Adjusted Performance

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Modest
Compared to the overall equity markets, risk-adjusted returns on investments in International Paper are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, International Paper may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Ardagh Group SA 

Risk-Adjusted Performance

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Over the last 90 days Ardagh Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Ardagh Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

International Paper and Ardagh Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Paper and Ardagh Group

The main advantage of trading using opposite International Paper and Ardagh Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper position performs unexpectedly, Ardagh Group 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 Ardagh Group will offset losses from the drop in Ardagh Group's long position.
The idea behind International Paper and Ardagh Group SA 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.

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