Correlation Between Smurfit WestRock and Fidelity Advisor

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Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Fidelity Advisor 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 Fidelity Advisor 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 Fidelity Advisor Sumer, you can compare the effects of market volatilities on Smurfit WestRock and Fidelity Advisor 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 Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Fidelity Advisor.

Diversification Opportunities for Smurfit WestRock and Fidelity Advisor

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Smurfit and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Fidelity Advisor Sumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sumer 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Sumer has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Fidelity Advisor

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 2.76 times more return on investment than Fidelity Advisor. However, Smurfit WestRock is 2.76 times more volatile than Fidelity Advisor Sumer. It trades about 0.33 of its potential returns per unit of risk. Fidelity Advisor Sumer is currently generating about 0.32 per unit of risk. If you would invest  4,558  in Smurfit WestRock plc on August 25, 2024 and sell it today you would earn a total of  1,106  from holding Smurfit WestRock plc or generate 24.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Smurfit WestRock plc  vs.  Fidelity Advisor Sumer

 Performance 
       Timeline  
Smurfit WestRock plc 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit WestRock plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Smurfit WestRock showed solid returns over the last few months and may actually be approaching a breakup point.
Fidelity Advisor Sumer 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Sumer are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Smurfit WestRock and Fidelity Advisor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Smurfit WestRock and Fidelity Advisor

The main advantage of trading using opposite Smurfit WestRock and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Fidelity Advisor 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 Fidelity Advisor will offset losses from the drop in Fidelity Advisor's long position.
The idea behind Smurfit WestRock plc and Fidelity Advisor Sumer 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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