Correlation Between Sealed Air and WestRock
Can any of the company-specific risk be diversified away by investing in both Sealed Air and WestRock 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 Sealed Air and WestRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and WestRock Co, you can compare the effects of market volatilities on Sealed Air and WestRock 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 Sealed Air with a short position of WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and WestRock.
Diversification Opportunities for Sealed Air and WestRock
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sealed and WestRock is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and WestRock Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WestRock and Sealed Air 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 Sealed Air are associated (or correlated) with WestRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WestRock has no effect on the direction of Sealed Air i.e., Sealed Air and WestRock go up and down completely randomly.
Pair Corralation between Sealed Air and WestRock
Considering the 90-day investment horizon Sealed Air is expected to generate 11.28 times less return on investment than WestRock. In addition to that, Sealed Air is 1.45 times more volatile than WestRock Co. It trades about 0.01 of its total potential returns per unit of risk. WestRock Co is currently generating about 0.2 per unit of volatility. If you would invest 4,508 in WestRock Co on February 4, 2024 and sell it today you would earn a total of 608.00 from holding WestRock Co or generate 13.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 97.73% |
Values | Daily Returns |
Sealed Air vs. WestRock Co
Performance |
Timeline |
Sealed Air |
WestRock |
Sealed Air and WestRock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sealed Air and WestRock
The main advantage of trading using opposite Sealed Air and WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, WestRock 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 WestRock will offset losses from the drop in WestRock's long position.Sealed Air vs. WestRock Co | Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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