Correlation Between Pactiv Evergreen and Crown Holdings

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

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

Diversification Opportunities for Pactiv Evergreen and Crown Holdings

-0.08

Correlation Coefficient

Pactiv Evergreen  Crown Holdings

Good diversification

The 3 months correlation between Pactiv and Crown is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pactiv Evergreen and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Pactiv Evergreen 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 Pactiv Evergreen 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 Pactiv Evergreen i.e., Pactiv Evergreen and Crown Holdings go up and down completely randomly.

Pair Corralation between Pactiv Evergreen and Crown Holdings

Given the investment horizon of 90 days Pactiv Evergreen is expected to under-perform the Crown Holdings. In addition to that, Pactiv Evergreen is 2.05 times more volatile than Crown Holdings. It trades about -0.03 of its total potential returns per unit of risk. Crown Holdings is currently generating about 0.2 per unit of volatility. If you would invest  7,291  in Crown Holdings on February 18, 2024 and sell it today you would earn a total of  1,199  from holding Crown Holdings or generate 16.44% return on investment over 90 days.

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

Pactiv Evergreen  vs.  Crown Holdings

Pactiv Evergreen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pactiv Evergreen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Pactiv Evergreen is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Crown Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Crown Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pactiv Evergreen and Crown Holdings

The main advantage of trading using opposite Pactiv Evergreen and Crown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pactiv Evergreen 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 Pactiv Evergreen 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.