Correlation Between Western Digital and Hospital Mater
Can any of the company-specific risk be diversified away by investing in both Western Digital and Hospital Mater 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 Western Digital and Hospital Mater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Hospital Mater Dei, you can compare the effects of market volatilities on Western Digital and Hospital Mater 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 Western Digital with a short position of Hospital Mater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Hospital Mater.
Diversification Opportunities for Western Digital and Hospital Mater
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Hospital is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Hospital Mater Dei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hospital Mater Dei and Western Digital 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 Western Digital are associated (or correlated) with Hospital Mater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hospital Mater Dei has no effect on the direction of Western Digital i.e., Western Digital and Hospital Mater go up and down completely randomly.
Pair Corralation between Western Digital and Hospital Mater
Assuming the 90 days trading horizon Western Digital is expected to generate 1.1 times more return on investment than Hospital Mater. However, Western Digital is 1.1 times more volatile than Hospital Mater Dei. It trades about 0.06 of its potential returns per unit of risk. Hospital Mater Dei is currently generating about -0.02 per unit of risk. If you would invest 18,085 in Western Digital on August 30, 2024 and sell it today you would earn a total of 18,415 from holding Western Digital or generate 101.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Western Digital vs. Hospital Mater Dei
Performance |
| Timeline |
| Western Digital |
| Hospital Mater Dei |
Western Digital and Hospital Mater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Hospital Mater
The main advantage of trading using opposite Western Digital and Hospital Mater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Hospital Mater 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 Hospital Mater will offset losses from the drop in Hospital Mater's long position.| Western Digital vs. TAL Education Group | Western Digital vs. NXP Semiconductors NV | Western Digital vs. The Home Depot | Western Digital vs. Sumitomo Mitsui Financial |
| Hospital Mater vs. Charter Communications | Hospital Mater vs. Metalrgica Riosulense SA | Hospital Mater vs. Healthpeak Properties | Hospital Mater vs. Lloyds Banking Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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