Correlation Between Sonoco Products and Donaldson
Can any of the company-specific risk be diversified away by investing in both Sonoco Products and Donaldson 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 Donaldson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonoco Products and Donaldson, you can compare the effects of market volatilities on Sonoco Products and Donaldson 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 Donaldson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonoco Products and Donaldson.
Diversification Opportunities for Sonoco Products and Donaldson
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonoco and Donaldson is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sonoco Products and Donaldson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donaldson 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 Donaldson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donaldson has no effect on the direction of Sonoco Products i.e., Sonoco Products and Donaldson go up and down completely randomly.
Pair Corralation between Sonoco Products and Donaldson
Considering the 90-day investment horizon Sonoco Products is expected to generate 10.4 times less return on investment than Donaldson. But when comparing it to its historical volatility, Sonoco Products is 1.2 times less risky than Donaldson. It trades about 0.02 of its potential returns per unit of risk. Donaldson is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 7,027 in Donaldson on June 11, 2025 and sell it today you would earn a total of 1,097 from holding Donaldson or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonoco Products vs. Donaldson
Performance |
| Timeline |
| Sonoco Products |
| Donaldson |
Sonoco Products and Donaldson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonoco Products and Donaldson
The main advantage of trading using opposite Sonoco Products and Donaldson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonoco Products position performs unexpectedly, Donaldson 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 Donaldson will offset losses from the drop in Donaldson's long position.| Sonoco Products vs. AptarGroup | Sonoco Products vs. Silgan Holdings | Sonoco Products vs. RPM International | Sonoco Products vs. Packaging Corp of |
| Donaldson vs. Franklin Electric Co | Donaldson vs. Crane Company | Donaldson vs. IDEX Corporation | Donaldson vs. Graco Inc |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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