Correlation Between Stagwell and Western Digital
Can any of the company-specific risk be diversified away by investing in both Stagwell 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 Stagwell and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Western Digital, you can compare the effects of market volatilities on Stagwell 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 Stagwell with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Western Digital.
Diversification Opportunities for Stagwell and Western Digital
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Stagwell and Western is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Stagwell 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 Stagwell 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 Stagwell i.e., Stagwell and Western Digital go up and down completely randomly.
Pair Corralation between Stagwell and Western Digital
Given the investment horizon of 90 days Stagwell is expected to generate 0.92 times more return on investment than Western Digital. However, Stagwell is 1.09 times less risky than Western Digital. It trades about 0.38 of its potential returns per unit of risk. Western Digital is currently generating about 0.19 per unit of risk. If you would invest 650.00 in Stagwell on September 2, 2024 and sell it today you would earn a total of 136.00 from holding Stagwell or generate 20.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stagwell vs. Western Digital
Performance |
| Timeline |
| Stagwell |
| Western Digital |
Stagwell and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and Western Digital
The main advantage of trading using opposite Stagwell and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell 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.| Stagwell vs. ADTRAN Inc | Stagwell vs. Belden Inc | Stagwell vs. ADC Therapeutics SA | Stagwell vs. Comtech Telecommunications 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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