Correlation Between Femasys and Smurfit WestRock

Can any of the company-specific risk be diversified away by investing in both Femasys 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 Femasys and Smurfit WestRock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Femasys and Smurfit WestRock plc, you can compare the effects of market volatilities on Femasys 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 Femasys with a short position of Smurfit WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Femasys and Smurfit WestRock.

Diversification Opportunities for Femasys and Smurfit WestRock

-0.38

Correlation Coefficient

Femasys  Smurfit WestRock

Very good diversification

The 3 months correlation between Femasys and Smurfit is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Femasys 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 Femasys 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 Femasys 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 Femasys i.e., Femasys and Smurfit WestRock go up and down completely randomly.

Pair Corralation between Femasys and Smurfit WestRock

Given the investment horizon of 90 days Femasys is expected to generate 1.83 times more return on investment than Smurfit WestRock. However, Femasys is 1.83 times more volatile than Smurfit WestRock plc. It trades about 0.15 of its potential returns per unit of risk. Smurfit WestRock plc is currently generating about -0.06 per unit of risk. If you would invest  110.00  in Femasys on December 19, 2024 and sell it today you would earn a total of  44.00  from holding Femasys or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Femasys  vs.  Smurfit WestRock plc

Femasys

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Femasys are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Femasys showed solid returns over the last few months and may actually be approaching a breakup point.

Smurfit WestRock plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smurfit WestRock plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Femasys and Smurfit WestRock

The main advantage of trading using opposite Femasys and Smurfit WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Femasys 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.

The idea behind Femasys and Smurfit WestRock plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.