Correlation Between Brunswick and Western Digital
Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Western Digital, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Western Digital.
Diversification Opportunities for Brunswick and Western Digital
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Brunswick and Western is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and Western Digital go up and down completely randomly.
Pair Corralation between Brunswick and Western Digital
Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the Western Digital. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 1.14 times less risky than Western Digital. The stock trades about -0.04 of its potential returns per unit of risk. The Western Digital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,603 in Western Digital on January 17, 2025 and sell it today you would earn a total of 959.00 from holding Western Digital or generate 36.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. Western Digital
Performance |
| Timeline |
| Brunswick |
| Western Digital |
Brunswick and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and Western Digital
The main advantage of trading using opposite Brunswick and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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