Correlation Between US Global and Western Digital
Can any of the company-specific risk be diversified away by investing in both US Global 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 US Global and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Investors and Western Digital, you can compare the effects of market volatilities on US Global 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 US Global with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Western Digital.
Diversification Opportunities for US Global and Western Digital
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GROW and Western is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and US Global 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 US Global Investors 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 US Global i.e., US Global and Western Digital go up and down completely randomly.
Pair Corralation between US Global and Western Digital
Given the investment horizon of 90 days US Global Investors is expected to under-perform the Western Digital. But the stock apears to be less risky and, when comparing its historical volatility, US Global Investors is 1.83 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 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,924 in Western Digital on September 4, 2024 and sell it today you would earn a total of 2,245 from holding Western Digital or generate 45.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Global Investors vs. Western Digital
Performance |
| Timeline |
| US Global Investors |
| Western Digital |
US Global and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and Western Digital
The main advantage of trading using opposite US Global and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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.| US Global vs. Visa Class A | US Global vs. Diamond Hill Investment | US Global vs. Associated Capital Group | US Global vs. Brookfield Corp |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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