Correlation Between Smurfit WestRock and Westport Fuel
Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Westport Fuel 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 Westport Fuel 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 Westport Fuel Systems, you can compare the effects of market volatilities on Smurfit WestRock and Westport Fuel 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 Westport Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Westport Fuel.
Diversification Opportunities for Smurfit WestRock and Westport Fuel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smurfit and Westport is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Westport Fuel Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westport Fuel Systems 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 Westport Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westport Fuel Systems has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Westport Fuel go up and down completely randomly.
Pair Corralation between Smurfit WestRock and Westport Fuel
Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 0.95 times more return on investment than Westport Fuel. However, Smurfit WestRock plc is 1.05 times less risky than Westport Fuel. It trades about 0.23 of its potential returns per unit of risk. Westport Fuel Systems is currently generating about 0.21 per unit of risk. If you would invest 4,977 in Smurfit WestRock plc on August 31, 2024 and sell it today you would earn a total of 499.00 from holding Smurfit WestRock plc or generate 10.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smurfit WestRock plc vs. Westport Fuel Systems
Performance |
| Timeline |
| Smurfit WestRock plc |
| Westport Fuel Systems |
Smurfit WestRock and Westport Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit WestRock and Westport Fuel
The main advantage of trading using opposite Smurfit WestRock and Westport Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock position performs unexpectedly, Westport Fuel 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 Westport Fuel will offset losses from the drop in Westport Fuel's long position.| Smurfit WestRock vs. Corporacion America Airports | Smurfit WestRock vs. Pentair PLC | Smurfit WestRock vs. ON Semiconductor | Smurfit WestRock vs. Valens |
| Westport Fuel vs. Foresight Autonomous Holdings | Westport Fuel vs. Hyliion Holdings Corp | Westport Fuel vs. American Axle Manufacturing | Westport Fuel vs. Gentex |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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