Correlation Between Smurfit WestRock and Amgen

Can any of the company-specific risk be diversified away by investing in both Smurfit WestRock and Amgen 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 Amgen 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 Amgen Inc, you can compare the effects of market volatilities on Smurfit WestRock and Amgen 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 Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit WestRock and Amgen.

Diversification Opportunities for Smurfit WestRock and Amgen

-0.72

Correlation Coefficient

Smurfit WestRock  Amgen

Pay attention - limited upside

The 3 months correlation between Smurfit and Amgen is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Amgen go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Amgen

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 1.08 times more return on investment than Amgen. However, Smurfit WestRock is 1.08 times more volatile than Amgen Inc. It trades about -0.18 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.37 per unit of risk. If you would invest  5,664  in Smurfit WestRock plc on September 23, 2024 and sell it today you would lose (336.00) from holding Smurfit WestRock plc or give up 5.93% of portfolio value over 90 days.

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

Smurfit WestRock plc  vs.  Amgen Inc

Smurfit WestRock plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit WestRock plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Smurfit WestRock showed solid returns over the last few months and may actually be approaching a breakup point.

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Smurfit WestRock and Amgen

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

The idea behind Smurfit WestRock plc and Amgen Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..