Correlation Between Smurfit WestRock and Barings BDC
Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Barings BDC 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 Barings BDC 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 Barings BDC, you can compare the effects of market volatilities on Smurfit WestRock and Barings BDC 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 Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Barings BDC.
Diversification Opportunities for Smurfit WestRock and Barings BDC
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smurfit and Barings is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC 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 Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Barings BDC go up and down completely randomly.
Pair Corralation between Smurfit WestRock and Barings BDC
Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 2.65 times more return on investment than Barings BDC. However, Smurfit WestRock is 2.65 times more volatile than Barings BDC. It trades about 0.05 of its potential returns per unit of risk. Barings BDC is currently generating about 0.07 per unit of risk. If you would invest 3,686 in Smurfit WestRock plc on September 3, 2024 and sell it today you would earn a total of 1,816 from holding Smurfit WestRock plc or generate 49.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.69% |
| Values | Daily Returns |
Smurfit WestRock plc vs. Barings BDC
Performance |
| Timeline |
| Smurfit WestRock plc |
| Barings BDC |
Smurfit WestRock and Barings BDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit WestRock and Barings BDC
The main advantage of trading using opposite Smurfit WestRock and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Barings BDC 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 Barings BDC will offset losses from the drop in Barings BDC's long position.| Smurfit WestRock vs. Barings BDC | Smurfit WestRock vs. Femasys | Smurfit WestRock vs. KeyCorp | Smurfit WestRock vs. LithiumBank Resources Corp |
| Barings BDC vs. Runway Growth Finance | Barings BDC vs. OneMain Holdings | Barings BDC vs. Navient Corp | Barings BDC vs. Oaktree Specialty Lending |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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