Correlation Between O I and Crown Holdings

Can any of the company-specific risk be diversified away by investing in both O I and Crown Holdings 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 O I and Crown Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between O I Glass and Crown Holdings, you can compare the effects of market volatilities on O I and Crown Holdings 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 O I with a short position of Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of O I and Crown Holdings.

Diversification Opportunities for O I and Crown Holdings

-0.63

Correlation Coefficient

O I  Crown Holdings

Excellent diversification

The 3 months correlation between O I and Crown is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding O I Glass and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and O I 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 O I Glass are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of O I i.e., O I and Crown Holdings go up and down completely randomly.

Pair Corralation between O I and Crown Holdings

Allowing for the 90-day total investment horizon O I Glass is expected to generate 1.26 times more return on investment than Crown Holdings. However, O I is 1.26 times more volatile than Crown Holdings. It trades about 0.02 of its potential returns per unit of risk. Crown Holdings is currently generating about -0.02 per unit of risk. If you would invest  1,348  in O I Glass on January 19, 2024 and sell it today you would earn a total of  194.00  from holding O I Glass or generate 14.39% return on investment over 90 days.

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

O I Glass  vs.  Crown Holdings

O I Glass

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in O I Glass are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, O I is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with O I and Crown Holdings

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

The idea behind O I Glass and Crown Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.