Correlation Between Smurfit WestRock and Unifi

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

Diversification Opportunities for Smurfit WestRock and Unifi

0.74

Correlation Coefficient

Smurfit WestRock  Unifi

Poor diversification

The 3 months correlation between Smurfit and Unifi is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Unifi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifi Inc 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 Unifi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifi Inc has no effect on the direction of Smurfit WestRock i.e., Smurfit WestRock and Unifi go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Unifi

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 0.7 times more return on investment than Unifi. However, Smurfit WestRock plc is 1.44 times less risky than Unifi. It trades about -0.1 of its potential returns per unit of risk. Unifi Inc is currently generating about -0.08 per unit of risk. If you would invest  5,372  in Smurfit WestRock plc on December 26, 2024 and sell it today you would lose (815.00) from holding Smurfit WestRock plc or give up 15.17% of portfolio value over 90 days.

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

Smurfit WestRock plc  vs.  Unifi Inc

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 conflicting 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.

Unifi Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unifi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and 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 Unifi

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

The idea behind Smurfit WestRock plc and Unifi Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.