Correlation Between Smurfit WestRock and Femasys

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

Diversification Opportunities for Smurfit WestRock and Femasys

-0.48

Correlation Coefficient

Smurfit WestRock  Femasys

Very good diversification

The 3 months correlation between Smurfit and Femasys is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Femasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Femasys 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 Femasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Femasys has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Femasys go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Femasys

Allowing for the 90-day total investment horizon Smurfit WestRock is expected to generate 2.69 times less return on investment than Femasys. But when comparing it to its historical volatility, Smurfit WestRock plc is 1.81 times less risky than Femasys. It trades about 0.05 of its potential returns per unit of risk. Femasys is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  111.00  in Femasys on October 25, 2024 and sell it today you would earn a total of  4.00  from holding Femasys or generate 3.6% return on investment over 90 days.

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

Smurfit WestRock plc  vs.  Femasys

Smurfit WestRock plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit WestRock plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Smurfit WestRock showed solid returns over the last few months and may actually be approaching a breakup point.

Femasys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Femasys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Smurfit WestRock and Femasys

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

The idea behind Smurfit WestRock plc and Femasys 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.