Correlation Between Valens and Smurfit WestRock
Can any of the company-specific risk be diversified away by investing in both Valens and Smurfit WestRock 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 Valens and Smurfit WestRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valens and Smurfit WestRock plc, you can compare the effects of market volatilities on Valens and Smurfit WestRock 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 Valens with a short position of Smurfit WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valens and Smurfit WestRock.
Diversification Opportunities for Valens and Smurfit WestRock
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valens and Smurfit is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Smurfit WestRock plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit WestRock plc and Valens 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 Valens are associated (or correlated) with Smurfit WestRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit WestRock plc has no effect on the direction of Valens i.e., Valens and Smurfit WestRock go up and down completely randomly.
Pair Corralation between Valens and Smurfit WestRock
Considering the 90-day investment horizon Valens is expected to generate 2.42 times more return on investment than Smurfit WestRock. However, Valens is 2.42 times more volatile than Smurfit WestRock plc. It trades about 0.14 of its potential returns per unit of risk. Smurfit WestRock plc is currently generating about 0.19 per unit of risk. If you would invest 175.00 in Valens on September 2, 2024 and sell it today you would earn a total of 22.00 from holding Valens or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valens vs. Smurfit WestRock plc
Performance |
| Timeline |
| Valens |
| Smurfit WestRock plc |
Valens and Smurfit WestRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valens and Smurfit WestRock
The main advantage of trading using opposite Valens and Smurfit WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens position performs unexpectedly, Smurfit WestRock 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 Smurfit WestRock will offset losses from the drop in Smurfit WestRock's long position.| Valens vs. Wolfspeed | Valens vs. GSI Technology | Valens vs. Lattice Semiconductor | Valens vs. ON Semiconductor |
| Smurfit WestRock vs. Church Dwight | Smurfit WestRock vs. Keurig Dr Pepper | Smurfit WestRock vs. Suntory Beverage Food | Smurfit WestRock vs. Lincoln Electric Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |