Correlation Between Smurfit WestRock and Energy Focu
Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Energy Focu 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 Energy Focu 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 Energy Focu, you can compare the effects of market volatilities on Smurfit WestRock and Energy Focu 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 Energy Focu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Energy Focu.
Diversification Opportunities for Smurfit WestRock and Energy Focu
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smurfit and Energy is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Energy Focu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Focu 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 Energy Focu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Focu has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Energy Focu go up and down completely randomly.
Pair Corralation between Smurfit WestRock and Energy Focu
Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 0.51 times more return on investment than Energy Focu. However, Smurfit WestRock plc is 1.95 times less risky than Energy Focu. It trades about 0.33 of its potential returns per unit of risk. Energy Focu is currently generating about 0.04 per unit of risk. If you would invest 4,556 in Smurfit WestRock plc on August 26, 2024 and sell it today you would earn a total of 1,108 from holding Smurfit WestRock plc or generate 24.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smurfit WestRock plc vs. Energy Focu
Performance |
| Timeline |
| Smurfit WestRock plc |
| Energy Focu |
Smurfit WestRock and Energy Focu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit WestRock and Energy Focu
The main advantage of trading using opposite Smurfit WestRock and Energy Focu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Energy Focu 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 Energy Focu will offset losses from the drop in Energy Focu's long position.| Smurfit WestRock vs. QuickLogic | Smurfit WestRock vs. ScanSource | Smurfit WestRock vs. Tritent International Agriculture | Smurfit WestRock vs. Analog Devices |
| Energy Focu vs. Petros Pharmaceuticals | Energy Focu vs. Pioneer Power Solutions | Energy Focu vs. Ensysce Biosciences |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |