Correlation Between Smurfit WestRock and Doubledown Interactive

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

Diversification Opportunities for Smurfit WestRock and Doubledown Interactive

0.38

Correlation Coefficient

Smurfit WestRock  Doubledown Interactive

Weak diversification

The 3 months correlation between Smurfit and Doubledown is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Doubledown Interactive Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubledown Interactive 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 Doubledown Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubledown Interactive has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Doubledown Interactive go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Doubledown Interactive

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to under-perform the Doubledown Interactive. But the stock apears to be less risky and, when comparing its historical volatility, Smurfit WestRock plc is 1.04 times less risky than Doubledown Interactive. The stock trades about -0.12 of its potential returns per unit of risk. The Doubledown Interactive Co is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Doubledown Interactive Co on December 5, 2024 and sell it today you would lose (121.00) from holding Doubledown Interactive Co or give up 11.0% of portfolio value over 90 days.

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

Smurfit WestRock plc  vs.  Doubledown Interactive Co

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 inconsistent 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.

Doubledown Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Doubledown Interactive Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Smurfit WestRock and Doubledown Interactive

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

The idea behind Smurfit WestRock plc and Doubledown Interactive 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.