Correlation Between Energisa and Western Digital
Can any of the company-specific risk be diversified away by investing in both Energisa 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 Energisa and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Western Digital, you can compare the effects of market volatilities on Energisa 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 Energisa with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Western Digital.
Diversification Opportunities for Energisa and Western Digital
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Energisa and Western is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Energisa 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 Energisa SA 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 Energisa i.e., Energisa and Western Digital go up and down completely randomly.
Pair Corralation between Energisa and Western Digital
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Western Digital. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 2.35 times less risky than Western Digital. The stock trades about -0.07 of its potential returns per unit of risk. The Western Digital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 22,792 in Western Digital on September 2, 2024 and sell it today you would earn a total of 13,708 from holding Western Digital or generate 60.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Western Digital
Performance |
| Timeline |
| Energisa SA |
| Western Digital |
Energisa and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Western Digital
The main advantage of trading using opposite Energisa and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa 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.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Western Digital vs. Dell Technologies | Western Digital vs. British American Tobacco | Western Digital vs. GP Investments | Western Digital vs. Metalurgica Gerdau SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Transaction History View history of all your transactions and understand their impact on performance |