Correlation Between Analog Devices and Smurfit WestRock
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Smurfit WestRock 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 Analog Devices and Smurfit WestRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Smurfit WestRock plc, you can compare the effects of market volatilities on Analog Devices and Smurfit WestRock 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 Analog Devices with a short position of Smurfit WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Smurfit WestRock.
Diversification Opportunities for Analog Devices and Smurfit WestRock
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Analog and Smurfit is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Smurfit WestRock plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit WestRock plc and Analog Devices 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 Analog Devices are associated (or correlated) with Smurfit WestRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit WestRock plc has no effect on the direction of Analog Devices i.e., Analog Devices and Smurfit WestRock go up and down completely randomly.
Pair Corralation between Analog Devices and Smurfit WestRock
Considering the 90-day investment horizon Analog Devices is expected to generate 3.16 times less return on investment than Smurfit WestRock. But when comparing it to its historical volatility, Analog Devices is 1.77 times less risky than Smurfit WestRock. It trades about 0.03 of its potential returns per unit of risk. Smurfit WestRock plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,746 in Smurfit WestRock plc on November 19, 2024 and sell it today you would earn a total of 1,619 from holding Smurfit WestRock plc or generate 43.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 59.88% |
| Values | Daily Returns |
Analog Devices vs. Smurfit WestRock plc
Performance |
| Timeline |
| Analog Devices |
| Smurfit WestRock plc |
Analog Devices and Smurfit WestRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Smurfit WestRock
The main advantage of trading using opposite Analog Devices and Smurfit WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Smurfit WestRock 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 Smurfit WestRock will offset losses from the drop in Smurfit WestRock's long position.| Analog Devices vs. NXP Semiconductors NV | Analog Devices vs. Qualcomm Incorporated | Analog Devices vs. Broadcom | Analog Devices vs. Microchip Technology |
| Smurfit WestRock vs. Avarone Metals | Smurfit WestRock vs. Barrick Gold Corp | Smurfit WestRock vs. Vulcan Materials | Smurfit WestRock vs. Summit Materials |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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