Correlation Between Vital Farms and Smurfit WestRock

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

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

Diversification Opportunities for Vital Farms and Smurfit WestRock

0.63

Correlation Coefficient

Vital Farms  Smurfit WestRock

Poor diversification

The 3 months correlation between Vital and Smurfit is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms 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 Vital Farms 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 Vital Farms 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 Vital Farms i.e., Vital Farms and Smurfit WestRock go up and down completely randomly.

Pair Corralation between Vital Farms and Smurfit WestRock

Given the investment horizon of 90 days Vital Farms is expected to under-perform the Smurfit WestRock. In addition to that, Vital Farms is 1.56 times more volatile than Smurfit WestRock plc. It trades about -0.12 of its total potential returns per unit of risk. Smurfit WestRock plc is currently generating about -0.09 per unit of volatility. If you would invest  5,286  in Smurfit WestRock plc on December 20, 2024 and sell it today you would lose (686.00) from holding Smurfit WestRock plc or give up 12.98% of portfolio value over 90 days.

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

Vital Farms  vs.  Smurfit WestRock plc

Vital Farms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vital Farms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 abnormal 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 Vital Farms and Smurfit WestRock

The main advantage of trading using opposite Vital Farms and Smurfit WestRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital Farms 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 Vital Farms 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.