Correlation Between Smurfit WestRock and Ball

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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

SmurfitBallDiversified AwaySmurfitBallDiversified Away100%
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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy60.4%
ValuesDaily Returns

Smurfit WestRock plc  vs.  Ball Corp.

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-50510
JavaScript chart by amCharts 3.21.15SW BALL
       Timeline  
Smurfit WestRock plc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Smurfit WestRock plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Smurfit WestRock is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4950515253545556
Ball 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ball Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5052545658606264

Smurfit WestRock and Ball Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.17-4.62-3.07-1.52-0.02581.523.114.716.37.9 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15SW BALL
       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.
The idea behind Smurfit WestRock plc and Ball Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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