Correlation Between WestRock and Amcor PLC

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

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

Diversification Opportunities for WestRock and Amcor PLC

0.0

Correlation Coefficient

WestRock  Amcor PLC

Pay attention - limited upside

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

Pair Corralation between WestRock and Amcor PLC

Considering the 90-day investment horizon WestRock Co is expected to generate 1.37 times more return on investment than Amcor PLC. However, WestRock is 1.37 times more volatile than Amcor PLC. It trades about 0.07 of its potential returns per unit of risk. Amcor PLC is currently generating about -0.01 per unit of risk. 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

WestRock Co  vs.  Amcor PLC

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.

Amcor PLC

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with WestRock and Amcor PLC

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

The idea behind WestRock Co and Amcor 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.