Correlation Between Smurfit WestRock and Nuvve Holding

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

Diversification Opportunities for Smurfit WestRock and Nuvve Holding

-0.57

Correlation Coefficient

Smurfit WestRock  Nuvve Holding

Excellent diversification

The 3 months correlation between Smurfit and Nuvve is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Nuvve Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvve Holding Corp 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 Nuvve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvve Holding Corp has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Nuvve Holding go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Nuvve Holding

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 0.31 times more return on investment than Nuvve Holding. However, Smurfit WestRock plc is 3.24 times less risky than Nuvve Holding. It trades about 0.05 of its potential returns per unit of risk. Nuvve Holding Corp is currently generating about -0.04 per unit of risk. If you would invest  3,915  in Smurfit WestRock plc on September 26, 2024 and sell it today you would earn a total of  1,538  from holding Smurfit WestRock plc or generate 39.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.95%
Values	Daily Returns

Smurfit WestRock plc  vs.  Nuvve Holding Corp

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 weak basic indicators, Smurfit WestRock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuvve Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvve Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Smurfit WestRock and Nuvve Holding

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

The idea behind Smurfit WestRock plc and Nuvve Holding Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..