Correlation Between Graphic Packaging and WisdomTree Voya

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

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

Diversification Opportunities for Graphic Packaging and WisdomTree Voya

0.21

Correlation Coefficient

Graphic Packaging  WisdomTree Voya

Modest diversification

The 3 months correlation between Graphic and WisdomTree is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and WisdomTree Voya Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Voya Yield and Graphic Packaging 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 Graphic Packaging Holding are associated (or correlated) with WisdomTree Voya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Voya Yield has no effect on the direction of Graphic Packaging i.e., Graphic Packaging and WisdomTree Voya go up and down completely randomly.

Pair Corralation between Graphic Packaging and WisdomTree Voya

Considering the 90-day investment horizon Graphic Packaging Holding is expected to generate 5.6 times more return on investment than WisdomTree Voya. However, Graphic Packaging is 5.6 times more volatile than WisdomTree Voya Yield. It trades about 0.16 of its potential returns per unit of risk. WisdomTree Voya Yield is currently generating about 0.08 per unit of risk. If you would invest  2,709  in Graphic Packaging Holding on March 4, 2024 and sell it today you would earn a total of  123.00  from holding Graphic Packaging Holding or generate 4.54% return on investment over 90 days.

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

Graphic Packaging Holding  vs.  WisdomTree Voya Yield

Graphic Packaging Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graphic Packaging Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Graphic Packaging may actually be approaching a critical reversion point that can send shares even higher in July 2024.

WisdomTree Voya Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Voya Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, WisdomTree Voya is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Graphic Packaging and WisdomTree Voya

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

The idea behind Graphic Packaging Holding and WisdomTree Voya Yield 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.