Correlation Between Westrock Coffee and DS Smith
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee and DS Smith 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 Westrock Coffee and DS Smith into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and DS Smith PLC, you can compare the effects of market volatilities on Westrock Coffee and DS Smith 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 Westrock Coffee with a short position of DS Smith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and DS Smith.
Diversification Opportunities for Westrock Coffee and DS Smith
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westrock and DITHF is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and DS Smith PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DS Smith PLC and Westrock Coffee 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 Westrock Coffee are associated (or correlated) with DS Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DS Smith PLC has no effect on the direction of Westrock Coffee i.e., Westrock Coffee and DS Smith go up and down completely randomly.
Pair Corralation between Westrock Coffee and DS Smith
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the DS Smith. But the stock apears to be less risky and, when comparing its historical volatility, Westrock Coffee is 1.38 times less risky than DS Smith. The stock trades about -0.03 of its potential returns per unit of risk. The DS Smith PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 361.00 in DS Smith PLC on September 3, 2024 and sell it today you would earn a total of 382.00 from holding DS Smith PLC or generate 105.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.08% |
| Values | Daily Returns |
Westrock Coffee vs. DS Smith PLC
Performance |
| Timeline |
| Westrock Coffee |
| DS Smith PLC |
Westrock Coffee and DS Smith Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and DS Smith
The main advantage of trading using opposite Westrock Coffee and DS Smith positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee position performs unexpectedly, DS Smith 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 DS Smith will offset losses from the drop in DS Smith's long position.| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
| DS Smith vs. Diageo PLC ADR | DS Smith vs. Ambev SA ADR | DS Smith vs. Anheuser Busch Inbev | DS Smith vs. Westrock Coffee |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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