Correlation Between Smurfit WestRock and Amcor PLC

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

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

Diversification Opportunities for Smurfit WestRock and Amcor PLC

-0.14

Correlation Coefficient

Smurfit WestRock  Amcor PLC

Good diversification

The 3 months correlation between Smurfit and Amcor is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Amcor PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor PLC and Smurfit WestRock 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 Smurfit WestRock plc are associated (or correlated) with Amcor PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor PLC has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Amcor PLC go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Amcor PLC

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to under-perform the Amcor PLC. In addition to that, Smurfit WestRock is 1.82 times more volatile than Amcor PLC. It trades about -0.1 of its total potential returns per unit of risk. Amcor PLC is currently generating about 0.07 per unit of volatility. If you would invest  922.00  in Amcor PLC on December 28, 2024 and sell it today you would earn a total of  49.00  from holding Amcor PLC or generate 5.31% return on investment over 90 days.

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

Smurfit WestRock plc  vs.  Amcor PLC

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Amcor PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amcor PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Amcor PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Smurfit WestRock and Amcor PLC

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

The idea behind Smurfit WestRock plc and Amcor 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.