Correlation Between Acme United and Western Digital
Can any of the company-specific risk be diversified away by investing in both Acme United and Western Digital 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 Acme United and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acme United and Western Digital, you can compare the effects of market volatilities on Acme United and Western Digital 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 Acme United with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acme United and Western Digital.
Diversification Opportunities for Acme United and Western Digital
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Acme and Western is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Acme United 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 Acme United are associated (or correlated) with Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Acme United i.e., Acme United and Western Digital go up and down completely randomly.
Pair Corralation between Acme United and Western Digital
Considering the 90-day investment horizon Acme United is expected to generate 1.24 times more return on investment than Western Digital. However, Acme United is 1.24 times more volatile than Western Digital. It trades about 0.06 of its potential returns per unit of risk. Western Digital is currently generating about 0.07 per unit of risk. If you would invest 2,303 in Acme United on August 30, 2024 and sell it today you would earn a total of 2,132 from holding Acme United or generate 92.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acme United vs. Western Digital
Performance |
| Timeline |
| Acme United |
| Western Digital |
Acme United and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acme United and Western Digital
The main advantage of trading using opposite Acme United and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acme United position performs unexpectedly, Western Digital 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 Western Digital will offset losses from the drop in Western Digital's long position.| Acme United vs. Mannatech Incorporated | Acme United vs. European Wax Center | Acme United vs. Inter Parfums | Acme United vs. Spectrum Brands Holdings |
| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
Check out your portfolio center.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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