Correlation Between Smurfit WestRock and Ford
Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Ford 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 Ford 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 Ford Motor, you can compare the effects of market volatilities on Smurfit WestRock and Ford 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 Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Ford.
Diversification Opportunities for Smurfit WestRock and Ford
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smurfit and Ford is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Ford go up and down completely randomly.
Pair Corralation between Smurfit WestRock and Ford
Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 5.89 times more return on investment than Ford. However, Smurfit WestRock is 5.89 times more volatile than Ford Motor. It trades about 0.32 of its potential returns per unit of risk. Ford Motor is currently generating about -0.28 per unit of risk. If you would invest 4,444 in Smurfit WestRock plc on August 30, 2024 and sell it today you would earn a total of 1,032 from holding Smurfit WestRock plc or generate 23.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Smurfit WestRock plc vs. Ford Motor
Performance |
| Timeline |
| Smurfit WestRock plc |
| Ford Motor |
Smurfit WestRock and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit WestRock and Ford
The main advantage of trading using opposite Smurfit WestRock and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Smurfit WestRock vs. Assurant | Smurfit WestRock vs. Primerica | Smurfit WestRock vs. JD Sports Fashion | Smurfit WestRock vs. United Parks Resorts |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |