Correlation Between Packaging Corp and Silgan Holdings

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

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

Diversification Opportunities for Packaging Corp and Silgan Holdings

0.54

Correlation Coefficient

Packaging Corp  Silgan Holdings

Very weak diversification

The 3 months correlation between Packaging and Silgan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Packaging Corp of and Silgan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgan Holdings and Packaging Corp 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 Packaging Corp of are associated (or correlated) with Silgan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgan Holdings has no effect on the direction of Packaging Corp i.e., Packaging Corp and Silgan Holdings go up and down completely randomly.

Pair Corralation between Packaging Corp and Silgan Holdings

Considering the 90-day investment horizon Packaging Corp of is expected to under-perform the Silgan Holdings. In addition to that, Packaging Corp is 1.06 times more volatile than Silgan Holdings. It trades about -0.24 of its total potential returns per unit of risk. Silgan Holdings is currently generating about 0.13 per unit of volatility. If you would invest  4,573  in Silgan Holdings on January 26, 2024 and sell it today you would earn a total of  159.00  from holding Silgan Holdings or generate 3.48% return on investment over 90 days.

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

Packaging Corp of  vs.  Silgan Holdings

Packaging Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging Corp of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Packaging Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Silgan Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silgan Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Silgan Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Packaging Corp and Silgan Holdings

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

The idea behind Packaging Corp of and Silgan 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.