Correlation Between Smurfit WestRock and Silgan Holdings
Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Silgan Holdings 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 Silgan Holdings 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 Silgan Holdings, you can compare the effects of market volatilities on Smurfit WestRock and Silgan Holdings 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 Silgan Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Silgan Holdings.
Diversification Opportunities for Smurfit WestRock and Silgan Holdings
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smurfit and Silgan is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Silgan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgan Holdings 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 Silgan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgan Holdings has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Silgan Holdings go up and down completely randomly.
Pair Corralation between Smurfit WestRock and Silgan Holdings
Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 2.58 times more return on investment than Silgan Holdings. However, Smurfit WestRock is 2.58 times more volatile than Silgan Holdings. It trades about 0.35 of its potential returns per unit of risk. Silgan Holdings is currently generating about 0.44 per unit of risk. If you would invest 4,502 in Smurfit WestRock plc on August 27, 2024 and sell it today you would earn a total of 1,123 from holding Smurfit WestRock plc or generate 24.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smurfit WestRock plc vs. Silgan Holdings
Performance |
| Timeline |
| Smurfit WestRock plc |
| Silgan Holdings |
Smurfit WestRock and Silgan Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit WestRock and Silgan Holdings
The main advantage of trading using opposite Smurfit WestRock and Silgan Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Silgan Holdings 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 Silgan Holdings will offset losses from the drop in Silgan Holdings' long position.| Smurfit WestRock vs. NETGEAR | Smurfit WestRock vs. Deluxe | Smurfit WestRock vs. BCE Inc | Smurfit WestRock vs. Freedom Internet Group |
| Silgan Holdings vs. Pactiv Evergreen | Silgan Holdings vs. Myers Industries | Silgan Holdings vs. Sonoco Products | Silgan Holdings vs. Avery Dennison Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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