Correlation Between Seagate Technology and Canaan
Can any of the company-specific risk be diversified away by investing in both Seagate Technology and Canaan 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 Seagate Technology and Canaan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seagate Technology PLC and Canaan Inc, you can compare the effects of market volatilities on Seagate Technology and Canaan 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 Seagate Technology with a short position of Canaan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagate Technology and Canaan.
Diversification Opportunities for Seagate Technology and Canaan
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seagate and Canaan is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and Seagate Technology 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 Seagate Technology PLC are associated (or correlated) with Canaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaan Inc has no effect on the direction of Seagate Technology i.e., Seagate Technology and Canaan go up and down completely randomly.
Pair Corralation between Seagate Technology and Canaan
Considering the 90-day investment horizon Seagate Technology is expected to generate 3.39 times less return on investment than Canaan. But when comparing it to its historical volatility, Seagate Technology PLC is 4.23 times less risky than Canaan. It trades about 0.06 of its potential returns per unit of risk. Canaan Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 151.00 in Canaan Inc on August 26, 2024 and sell it today you would earn a total of 46.00 from holding Canaan Inc or generate 30.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seagate Technology PLC vs. Canaan Inc
Performance |
| Timeline |
| Seagate Technology PLC |
| Canaan Inc |
Seagate Technology and Canaan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seagate Technology and Canaan
The main advantage of trading using opposite Seagate Technology and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagate Technology position performs unexpectedly, Canaan 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 Canaan will offset losses from the drop in Canaan's long position.| Seagate Technology vs. NetApp Inc | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Pure Storage | Seagate Technology vs. HP Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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