Correlation Between Smurfit WestRock and Micromobility

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

Diversification Opportunities for Smurfit WestRock and Micromobility

-0.64

Correlation Coefficient

Smurfit WestRock  Micromobility

Excellent diversification

The 3 months correlation between Smurfit and Micromobility is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Micromobility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micromobility 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 Micromobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micromobility has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Micromobility go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Micromobility

If you would invest  4,549  in Smurfit WestRock plc on September 29, 2024 and sell it today you would earn a total of  886.00  from holding Smurfit WestRock plc or generate 19.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.8%
Values	Daily Returns

Smurfit WestRock plc  vs.  Micromobility

Smurfit WestRock plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit WestRock plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Smurfit WestRock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Micromobility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micromobility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Micromobility is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Smurfit WestRock and Micromobility

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

The idea behind Smurfit WestRock plc and Micromobility 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.