Correlation Between WestRock and Eightco Holdings

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

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

Diversification Opportunities for WestRock and Eightco Holdings

0.13

Correlation Coefficient

WestRock  Eightco Holdings

Average diversification

The 3 months correlation between WestRock and Eightco is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding WestRock Co and Eightco Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eightco Holdings 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 Eightco Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eightco Holdings has no effect on the direction of WestRock i.e., WestRock and Eightco Holdings go up and down completely randomly.

Pair Corralation between WestRock and Eightco Holdings

Considering the 90-day investment horizon WestRock Co is expected to generate 0.24 times more return on investment than Eightco Holdings. However, WestRock Co is 4.16 times less risky than Eightco Holdings. It trades about 0.23 of its potential returns per unit of risk. Eightco Holdings is currently generating about 0.01 per unit of risk. If you would invest  4,262  in WestRock Co on February 14, 2024 and sell it today you would earn a total of  848.00  from holding WestRock Co or generate 19.9% return on investment over 90 days.

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

WestRock Co  vs.  Eightco Holdings

WestRock

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WestRock Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, WestRock disclosed solid returns over the last few months and may actually be approaching a breakup point.

Eightco Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Eightco Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Eightco Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with WestRock and Eightco Holdings

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

The idea behind WestRock Co and Eightco Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.