Correlation Between Smurfit WestRock and Asure Software

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

Diversification Opportunities for Smurfit WestRock and Asure Software

0.07

Correlation Coefficient

Smurfit WestRock  Asure Software

Significant diversification

The 3 months correlation between Smurfit and Asure is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software 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 Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Asure Software go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Asure Software

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 1.45 times more return on investment than Asure Software. However, Smurfit WestRock is 1.45 times more volatile than Asure Software. It trades about -0.11 of its potential returns per unit of risk. Asure Software is currently generating about -0.33 per unit of risk. If you would invest  5,310  in Smurfit WestRock plc on December 5, 2024 and sell it today you would lose (437.50) from holding Smurfit WestRock plc or give up 8.24% of portfolio value over 90 days.

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

Smurfit WestRock plc  vs.  Asure Software

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 inconsistent 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.

Asure Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Asure Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Smurfit WestRock and Asure Software

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

The idea behind Smurfit WestRock plc and Asure Software 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.