Correlation Between Myers Industries and WestRock

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

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

Diversification Opportunities for Myers Industries and WestRock

-0.67

Correlation Coefficient

Myers Industries  WestRock

Excellent diversification

The 3 months correlation between Myers and WestRock is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Myers Industries and WestRock Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WestRock and Myers Industries 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 Myers Industries are associated (or correlated) with WestRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WestRock has no effect on the direction of Myers Industries i.e., Myers Industries and WestRock go up and down completely randomly.

Pair Corralation between Myers Industries and WestRock

Considering the 90-day investment horizon Myers Industries is expected to under-perform the WestRock. In addition to that, Myers Industries is 1.21 times more volatile than WestRock Co. It trades about -0.05 of its total potential returns per unit of risk. WestRock Co is currently generating about 0.06 per unit of volatility. If you would invest  3,582  in WestRock Co on October 4, 2024 and sell it today you would earn a total of  1,569  from holding WestRock Co or generate 43.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	74.95%
Values	Daily Returns

Myers Industries  vs.  WestRock Co

Myers Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Myers Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

WestRock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WestRock Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, WestRock is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Myers Industries and WestRock

The main advantage of trading using opposite Myers Industries and WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Myers Industries position performs unexpectedly, 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 WestRock will offset losses from the drop in WestRock's long position.

The idea behind Myers Industries and WestRock Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.