Correlation Between Keurig Dr and Smurfit WestRock
Can any of the company-specific risk be diversified away by investing in both Keurig Dr 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 Keurig Dr and Smurfit WestRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keurig Dr Pepper and Smurfit WestRock plc, you can compare the effects of market volatilities on Keurig Dr 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 Keurig Dr with a short position of Smurfit WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Smurfit WestRock.
Diversification Opportunities for Keurig Dr and Smurfit WestRock
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Keurig and Smurfit is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper 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 Keurig Dr 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 Keurig Dr Pepper 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 Keurig Dr i.e., Keurig Dr and Smurfit WestRock go up and down completely randomly.
Pair Corralation between Keurig Dr and Smurfit WestRock
Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Smurfit WestRock. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 1.37 times less risky than Smurfit WestRock. The stock trades about -0.01 of its potential returns per unit of risk. The Smurfit WestRock plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 5,115 in Smurfit WestRock plc on September 2, 2024 and sell it today you would earn a total of 387.00 from holding Smurfit WestRock plc or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keurig Dr Pepper vs. Smurfit WestRock plc
Performance |
| Timeline |
| Keurig Dr Pepper |
| Smurfit WestRock plc |
Keurig Dr and Smurfit WestRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keurig Dr and Smurfit WestRock
The main advantage of trading using opposite Keurig Dr and Smurfit WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr 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.| Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Vita Coco | Keurig Dr vs. PepsiCo | Keurig Dr vs. Coca Cola Femsa SAB |
| Smurfit WestRock vs. Church Dwight | Smurfit WestRock vs. Keurig Dr Pepper | Smurfit WestRock vs. Suntory Beverage Food | Smurfit WestRock vs. Lincoln Electric Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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