Correlation Between Sealed Air and Adaptive Medias

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Can any of the company-specific risk be diversified away by investing in both Sealed Air and Adaptive Medias 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 Adaptive Medias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Adaptive Medias, you can compare the effects of market volatilities on Sealed Air and Adaptive Medias 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 Adaptive Medias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Adaptive Medias.

Diversification Opportunities for Sealed Air and Adaptive Medias

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Sealed and Adaptive is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Adaptive Medias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Medias 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 Adaptive Medias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Medias has no effect on the direction of Sealed Air i.e., Sealed Air and Adaptive Medias go up and down completely randomly.

Pair Corralation between Sealed Air and Adaptive Medias

If you would invest  0.01  in Adaptive Medias on January 22, 2024 and sell it today you would earn a total of  0.00  from holding Adaptive Medias or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Sealed Air  vs.  Adaptive Medias

 Performance 
       Timeline  
Sealed Air 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Sealed Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
Adaptive Medias 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Adaptive Medias has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Adaptive Medias is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sealed Air and Adaptive Medias Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sealed Air and Adaptive Medias

The main advantage of trading using opposite Sealed Air and Adaptive Medias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, Adaptive Medias 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 Adaptive Medias will offset losses from the drop in Adaptive Medias' long position.
The idea behind Sealed Air and Adaptive Medias 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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