Correlation Between Smurfit WestRock and Us Global

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

Diversification Opportunities for Smurfit WestRock and Us Global

0.48

Correlation Coefficient

Smurfit WestRock  Us Global

Very weak diversification

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

Pair Corralation between Smurfit WestRock and Us Global

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to generate 2.35 times more return on investment than Us Global. However, Smurfit WestRock is 2.35 times more volatile than Us Global Investors. It trades about 0.14 of its potential returns per unit of risk. Us Global Investors is currently generating about 0.11 per unit of risk. If you would invest  4,543  in Smurfit WestRock plc on September 2, 2024 and sell it today you would earn a total of  959.00  from holding Smurfit WestRock plc or generate 21.11% return on investment over 90 days.

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

Smurfit WestRock plc  vs.  Us Global Investors

Smurfit WestRock plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit WestRock plc are ranked lower than 10 (%) 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.

Us Global Investors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Us Global Investors are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Smurfit WestRock and Us Global

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

The idea behind Smurfit WestRock plc and Us Global Investors 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.