Correlation Between Smurfit Kappa and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa and Dow Jones 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 Smurfit Kappa and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smurfit Kappa Group and Dow Jones Industrial, you can compare the effects of market volatilities on Smurfit Kappa and Dow Jones 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 Smurfit Kappa with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and Dow Jones.
Diversification Opportunities for Smurfit Kappa and Dow Jones
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smurfit and Dow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Smurfit Kappa 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 Smurfit Kappa Group are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and Dow Jones go up and down completely randomly.
Pair Corralation between Smurfit Kappa and Dow Jones
Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 3.34 times more return on investment than Dow Jones. However, Smurfit Kappa is 3.34 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 3,431 in Smurfit Kappa Group on September 4, 2024 and sell it today you would earn a total of 1,839 from holding Smurfit Kappa Group or generate 53.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Smurfit Kappa Group vs. Dow Jones Industrial
Performance |
| Timeline |
Smurfit Kappa and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Smurfit Kappa Group
Pair trading matchups for Smurfit Kappa
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Smurfit Kappa and Dow Jones
The main advantage of trading using opposite Smurfit Kappa and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Smurfit Kappa vs. AptarGroup | Smurfit Kappa vs. Superior Plus Corp | Smurfit Kappa vs. NMI Holdings | Smurfit Kappa vs. Origin Agritech |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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