Correlation Between Stepstone and Western Digital
Can any of the company-specific risk be diversified away by investing in both Stepstone 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 Stepstone and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Western Digital, you can compare the effects of market volatilities on Stepstone 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 Stepstone with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Western Digital.
Diversification Opportunities for Stepstone and Western Digital
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stepstone and Western is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Stepstone 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 Stepstone Group 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 Stepstone i.e., Stepstone and Western Digital go up and down completely randomly.
Pair Corralation between Stepstone and Western Digital
Given the investment horizon of 90 days Stepstone Group is expected to generate 0.89 times more return on investment than Western Digital. However, Stepstone Group is 1.12 times less risky than Western Digital. It trades about 0.11 of its potential returns per unit of risk. Western Digital is currently generating about 0.06 per unit of risk. If you would invest 2,171 in Stepstone Group on November 27, 2024 and sell it today you would earn a total of 3,635 from holding Stepstone Group or generate 167.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Western Digital
Performance |
| Timeline |
| Stepstone Group |
| Western Digital |
Stepstone and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Western Digital
The main advantage of trading using opposite Stepstone and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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