Correlation Between Unifi and Smurfit WestRock

Can any of the company-specific risk be diversified away by investing in both Unifi and Smurfit WestRock 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 Unifi and Smurfit WestRock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Unifi Inc and Smurfit WestRock plc, you can compare the effects of market volatilities on Unifi and Smurfit WestRock 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 Unifi with a short position of Smurfit WestRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unifi and Smurfit WestRock.

Diversification Opportunities for Unifi and Smurfit WestRock

0.19

Correlation Coefficient

Unifi  Smurfit WestRock

Average diversification

The 3 months correlation between Unifi and Smurfit is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Unifi Inc and Smurfit WestRock plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit WestRock plc and Unifi 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 Unifi Inc are associated (or correlated) with Smurfit WestRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit WestRock plc has no effect on the direction of Unifi i.e., Unifi and Smurfit WestRock go up and down completely randomly.

Pair Corralation between Unifi and Smurfit WestRock

Considering the 90-day investment horizon Unifi Inc is expected to under-perform the Smurfit WestRock. In addition to that, Unifi is 1.01 times more volatile than Smurfit WestRock plc. It trades about -0.01 of its total potential returns per unit of risk. Smurfit WestRock plc is currently generating about 0.05 per unit of volatility. If you would invest  3,394  in Smurfit WestRock plc on December 5, 2024 and sell it today you would earn a total of  1,275  from holding Smurfit WestRock plc or generate 37.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.05%
Values	Daily Returns

Unifi Inc  vs.  Smurfit WestRock plc

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 fairly strong technical and fundamental indicators, Unifi is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 inconsistent 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.

Pair Trading with Unifi and Smurfit WestRock

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

The idea behind Unifi Inc and Smurfit WestRock plc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.