Correlation Between Smurfit WestRock and Solid Power
Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Solid Power 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 Solid Power 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 Solid Power, you can compare the effects of market volatilities on Smurfit WestRock and Solid Power 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 Solid Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Solid Power.
Diversification Opportunities for Smurfit WestRock and Solid Power
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Smurfit and Solid is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power 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 Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Solid Power go up and down completely randomly.
Pair Corralation between Smurfit WestRock and Solid Power
Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 0.61 times more return on investment than Solid Power. However, Smurfit WestRock plc is 1.64 times less risky than Solid Power. It trades about 0.09 of its potential returns per unit of risk. Solid Power is currently generating about 0.01 per unit of risk. If you would invest 3,696 in Smurfit WestRock plc on September 4, 2024 and sell it today you would earn a total of 1,815 from holding Smurfit WestRock plc or generate 49.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 72.87% |
| Values | Daily Returns |
Smurfit WestRock plc vs. Solid Power
Performance |
| Timeline |
| Smurfit WestRock plc |
| Solid Power |
Smurfit WestRock and Solid Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit WestRock and Solid Power
The main advantage of trading using opposite Smurfit WestRock and Solid Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Solid Power 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 Solid Power will offset losses from the drop in Solid Power's long position.| Smurfit WestRock vs. Boyd Gaming | Smurfit WestRock vs. Old Dominion Freight | Smurfit WestRock vs. Skillful Craftsman Education | Smurfit WestRock vs. SBM Offshore NV |
| Solid Power vs. Quantumscape Corp | Solid Power vs. Mobileye Global Class | Solid Power vs. Innoviz Technologies | Solid Power vs. Aeva Technologies |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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