Correlation Between Smurfit Kappa and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa and ConocoPhillips 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 ConocoPhillips 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 ConocoPhillips, you can compare the effects of market volatilities on Smurfit Kappa and ConocoPhillips 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 ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and ConocoPhillips.
Diversification Opportunities for Smurfit Kappa and ConocoPhillips
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smurfit and ConocoPhillips is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and ConocoPhillips go up and down completely randomly.
Pair Corralation between Smurfit Kappa and ConocoPhillips
Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 1.24 times more return on investment than ConocoPhillips. However, Smurfit Kappa is 1.24 times more volatile than ConocoPhillips. It trades about 0.18 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.05 per unit of risk. If you would invest 4,645 in Smurfit Kappa Group on September 2, 2024 and sell it today you would earn a total of 425.00 from holding Smurfit Kappa Group or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Smurfit Kappa Group vs. ConocoPhillips
Performance |
| Timeline |
| Smurfit Kappa Group |
| ConocoPhillips |
Smurfit Kappa and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit Kappa and ConocoPhillips
The main advantage of trading using opposite Smurfit Kappa and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.| Smurfit Kappa vs. CN MODERN DAIRY | Smurfit Kappa vs. Mitsubishi Materials | Smurfit Kappa vs. Beyond Meat | Smurfit Kappa vs. VULCAN MATERIALS |
| ConocoPhillips vs. CyberArk Software | ConocoPhillips vs. ADRIATIC METALS LS 013355 | ConocoPhillips vs. MCEWEN MINING INC | ConocoPhillips vs. SERI INDUSTRIAL EO |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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