Correlation Between Ardagh Group and Crown Holdings

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

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

Diversification Opportunities for Ardagh Group and Crown Holdings

0.0

Correlation Coefficient

Ardagh Group  Crown Holdings

Pay attention - limited upside

The 3 months correlation between Ardagh and Crown is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ardagh Group SA and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Ardagh Group 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 Ardagh Group SA 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 Ardagh Group i.e., Ardagh Group and Crown Holdings go up and down completely randomly.

Pair Corralation between Ardagh Group and Crown Holdings

If you would invest  7,699  in Crown Holdings on February 7, 2024 and sell it today you would earn a total of  628.00  from holding Crown Holdings or generate 8.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ardagh Group SA  vs.  Crown Holdings

Ardagh Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

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.

Crown Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Crown Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Ardagh Group and Crown Holdings

The main advantage of trading using opposite Ardagh Group and Crown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardagh Group 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 Ardagh Group SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.