Correlation Between Western Digital and Corsair Gaming
Can any of the company-specific risk be diversified away by investing in both Western Digital and Corsair Gaming 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 Corsair Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Corsair Gaming, you can compare the effects of market volatilities on Western Digital and Corsair Gaming 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 Corsair Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Corsair Gaming.
Diversification Opportunities for Western Digital and Corsair Gaming
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Corsair is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming 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 Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Western Digital i.e., Western Digital and Corsair Gaming go up and down completely randomly.
Pair Corralation between Western Digital and Corsair Gaming
Assuming the 90 days horizon Western Digital is expected to generate 1.06 times less return on investment than Corsair Gaming. But when comparing it to its historical volatility, Western Digital is 2.1 times less risky than Corsair Gaming. It trades about 0.23 of its potential returns per unit of risk. Corsair Gaming is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 615.00 in Corsair Gaming on September 4, 2024 and sell it today you would earn a total of 74.00 from holding Corsair Gaming or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Digital vs. Corsair Gaming
Performance |
| Timeline |
| Western Digital |
| Corsair Gaming |
Western Digital and Corsair Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Corsair Gaming
The main advantage of trading using opposite Western Digital and Corsair Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Corsair Gaming 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 Corsair Gaming will offset losses from the drop in Corsair Gaming's long position.| Western Digital vs. Zijin Mining Group | Western Digital vs. EHEALTH | Western Digital vs. Computershare Limited | Western Digital vs. Bumrungrad Hospital Public |
| Corsair Gaming vs. HP Inc | Corsair Gaming vs. Dell Technologies | Corsair Gaming vs. Western Digital | Corsair Gaming vs. SEIKO EPSON PADR |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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