Correlation Between Silgan Holdings and Sealed Air

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

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

Diversification Opportunities for Silgan Holdings and Sealed Air

-0.49

Correlation Coefficient

Silgan Holdings  Sealed Air

Very good diversification

The 3 months correlation between Silgan and Sealed is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Silgan Holdings and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Silgan Holdings i.e., Silgan Holdings and Sealed Air go up and down completely randomly.

Pair Corralation between Silgan Holdings and Sealed Air

Given the investment horizon of 90 days Silgan Holdings is expected to generate 0.64 times more return on investment than Sealed Air. However, Silgan Holdings is 1.57 times less risky than Sealed Air. It trades about 0.13 of its potential returns per unit of risk. Sealed Air is currently generating about -0.27 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Silgan Holdings  vs.  Sealed Air

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.

Sealed Air

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Silgan Holdings and Sealed Air

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

The idea behind Silgan Holdings and Sealed Air 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.