Correlation Between Silgan Holdings and Graphic Packaging

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

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

Diversification Opportunities for Silgan Holdings and Graphic Packaging

0.72

Correlation Coefficient

Silgan Holdings  Graphic Packaging

Poor diversification

The 3 months correlation between Silgan and Graphic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Silgan Holdings and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding and Silgan Holdings 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 Silgan Holdings are associated (or correlated) with Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of Silgan Holdings i.e., Silgan Holdings and Graphic Packaging go up and down completely randomly.

Pair Corralation between Silgan Holdings and Graphic Packaging

Given the investment horizon of 90 days Silgan Holdings is expected to under-perform the Graphic Packaging. In addition to that, Silgan Holdings is 1.03 times more volatile than Graphic Packaging Holding. It trades about -0.01 of its total potential returns per unit of risk. Graphic Packaging Holding is currently generating about 0.05 per unit of volatility. If you would invest  2,236  in Graphic Packaging Holding on January 31, 2024 and sell it today you would earn a total of  547.00  from holding Graphic Packaging Holding or generate 24.46% return on investment over 90 days.

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

Silgan Holdings  vs.  Graphic Packaging Holding

Silgan Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silgan Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Silgan Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Graphic Packaging Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graphic Packaging Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Graphic Packaging may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Silgan Holdings and Graphic Packaging

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

The idea behind Silgan Holdings and Graphic Packaging Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.