Correlation Between Smurfit WestRock and Ball
Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Ball 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 WestRock and Ball into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smurfit WestRock plc and Ball Corporation, you can compare the effects of market volatilities on Smurfit WestRock and Ball 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 WestRock with a short position of Ball. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Ball.
Diversification Opportunities for Smurfit WestRock and Ball
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Smurfit and Ball is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Ball Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ball and Smurfit WestRock 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 WestRock plc are associated (or correlated) with Ball. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ball has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Ball go up and down completely randomly.
Pair Corralation between Smurfit WestRock and Ball
Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 1.8 times more return on investment than Ball. However, Smurfit WestRock is 1.8 times more volatile than Ball Corporation. It trades about 0.05 of its potential returns per unit of risk. Ball Corporation is currently generating about 0.0 per unit of risk. If you would invest 3,786 in Smurfit WestRock plc on November 26, 2024 and sell it today you would earn a total of 1,599 from holding Smurfit WestRock plc or generate 42.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 60.4% |
Values | Daily Returns |
Smurfit WestRock plc vs. Ball Corp.
Performance |
Timeline |
Smurfit WestRock plc |
Ball |
Smurfit WestRock and Ball Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Smurfit WestRock and Ball
The main advantage of trading using opposite Smurfit WestRock and Ball positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Ball 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 Ball will offset losses from the drop in Ball's long position.Smurfit WestRock vs. WPP PLC ADR | ||
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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