Correlation Between Amcor PLC and WestRock

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

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

Diversification Opportunities for Amcor PLC and WestRock

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Correlation Coefficient

Amcor PLC  WestRock

Pay attention - limited upside

The 3 months correlation between Amcor and WestRock is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amcor PLC and WestRock Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WestRock and Amcor PLC 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 Amcor PLC are associated (or correlated) with WestRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WestRock has no effect on the direction of Amcor PLC i.e., Amcor PLC and WestRock go up and down completely randomly.

Pair Corralation between Amcor PLC and WestRock

Given the investment horizon of 90 days Amcor PLC is expected to under-perform the WestRock. But the stock apears to be less risky and, when comparing its historical volatility, Amcor PLC is 1.37 times less risky than WestRock. The stock trades about -0.01 of its potential returns per unit of risk. The WestRock Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,394  in WestRock Co on September 14, 2024 and sell it today you would earn a total of  1,757  from holding WestRock Co or generate 51.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	77.37%
Values	Daily Returns

Amcor PLC  vs.  WestRock Co

Amcor PLC

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Amcor PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

WestRock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WestRock Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, WestRock is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Amcor PLC and WestRock

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

The idea behind Amcor PLC and WestRock Co 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.