Correlation Between Sonoco Products and Packaging Corp

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

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

Diversification Opportunities for Sonoco Products and Packaging Corp

0.69

Correlation Coefficient

Sonoco Products  Packaging Corp

Poor diversification

The 3 months correlation between Sonoco and Packaging is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sonoco Products and Packaging Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packaging Corp and Sonoco Products 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 Sonoco Products are associated (or correlated) with Packaging Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packaging Corp has no effect on the direction of Sonoco Products i.e., Sonoco Products and Packaging Corp go up and down completely randomly.

Pair Corralation between Sonoco Products and Packaging Corp

Considering the 90-day investment horizon Sonoco Products is expected to generate 0.76 times more return on investment than Packaging Corp. However, Sonoco Products is 1.31 times less risky than Packaging Corp. It trades about -0.02 of its potential returns per unit of risk. Packaging Corp of is currently generating about -0.17 per unit of risk. If you would invest  5,717  in Sonoco Products on February 5, 2024 and sell it today you would lose (37.00) from holding Sonoco Products or give up 0.65% of portfolio value over 90 days.

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

Sonoco Products  vs.  Packaging Corp of

Sonoco Products

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sonoco Products are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sonoco Products is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Packaging Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging Corp of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking signals, Packaging Corp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Sonoco Products and Packaging Corp

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

The idea behind Sonoco Products and Packaging Corp of 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.