Correlation Between MYR and Smurfit WestRock
Can any of the company-specific risk be diversified away by investing in both MYR 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 MYR and Smurfit WestRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MYR Group and Smurfit WestRock plc, you can compare the effects of market volatilities on MYR 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 MYR with a short position of Smurfit WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYR and Smurfit WestRock.
Diversification Opportunities for MYR and Smurfit WestRock
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MYR and Smurfit is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group 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 MYR 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 MYR Group 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 MYR i.e., MYR and Smurfit WestRock go up and down completely randomly.
Pair Corralation between MYR and Smurfit WestRock
Given the investment horizon of 90 days MYR Group is expected to under-perform the Smurfit WestRock. In addition to that, MYR is 1.44 times more volatile than Smurfit WestRock plc. It trades about -0.14 of its total potential returns per unit of risk. Smurfit WestRock plc is currently generating about -0.07 per unit of volatility. If you would invest 5,522 in Smurfit WestRock plc on October 4, 2024 and sell it today you would lose (136.00) from holding Smurfit WestRock plc or give up 2.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
MYR Group vs. Smurfit WestRock plc
Performance |
Timeline |
MYR Group |
Smurfit WestRock plc |
MYR and Smurfit WestRock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MYR and Smurfit WestRock
The main advantage of trading using opposite MYR and Smurfit WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYR 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 MYR Group 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.Smurfit WestRock vs. SNDL Inc | Smurfit WestRock vs. Vodka Brands Corp | Smurfit WestRock vs. Merit Medical Systems | Smurfit WestRock vs. Diageo PLC ADR |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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