Correlation Between Smurfit WestRock and Leisure Fund
Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Leisure Fund 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 Leisure Fund 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 Leisure Fund Investor, you can compare the effects of market volatilities on Smurfit WestRock and Leisure Fund 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 Leisure Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Leisure Fund.
Diversification Opportunities for Smurfit WestRock and Leisure Fund
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smurfit and Leisure is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Leisure Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leisure Fund Investor 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 Leisure Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leisure Fund Investor has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Leisure Fund go up and down completely randomly.
Pair Corralation between Smurfit WestRock and Leisure Fund
Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 4.32 times more return on investment than Leisure Fund. However, Smurfit WestRock is 4.32 times more volatile than Leisure Fund Investor. It trades about 0.31 of its potential returns per unit of risk. Leisure Fund Investor is currently generating about 0.44 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 Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Smurfit WestRock plc vs. Leisure Fund Investor
Performance |
| Timeline |
| Smurfit WestRock plc |
| Leisure Fund Investor |
Smurfit WestRock and Leisure Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit WestRock and Leisure Fund
The main advantage of trading using opposite Smurfit WestRock and Leisure Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Leisure Fund 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 Leisure Fund will offset losses from the drop in Leisure Fund's long position.| Smurfit WestRock vs. Assurant | Smurfit WestRock vs. Primerica | Smurfit WestRock vs. JD Sports Fashion | Smurfit WestRock vs. United Parks Resorts |
| Leisure Fund vs. Retailing Fund Investor | Leisure Fund vs. Financial Services Fund | Leisure Fund vs. Banking Fund Investor | Leisure Fund vs. Health Care Fund |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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