Correlation Between WESTERN DIGITAL and LIBERTY DEFENSE
Can any of the company-specific risk be diversified away by investing in both WESTERN DIGITAL and LIBERTY DEFENSE 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 LIBERTY DEFENSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTERN DIGITAL and LIBERTY DEFENSE H, you can compare the effects of market volatilities on WESTERN DIGITAL and LIBERTY DEFENSE 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 LIBERTY DEFENSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTERN DIGITAL and LIBERTY DEFENSE.
Diversification Opportunities for WESTERN DIGITAL and LIBERTY DEFENSE
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WESTERN and LIBERTY is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN DIGITAL and LIBERTY DEFENSE H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIBERTY DEFENSE H 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 LIBERTY DEFENSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIBERTY DEFENSE H has no effect on the direction of WESTERN DIGITAL i.e., WESTERN DIGITAL and LIBERTY DEFENSE go up and down completely randomly.
Pair Corralation between WESTERN DIGITAL and LIBERTY DEFENSE
Assuming the 90 days trading horizon WESTERN DIGITAL is expected to generate 6.14 times less return on investment than LIBERTY DEFENSE. But when comparing it to its historical volatility, WESTERN DIGITAL is 5.62 times less risky than LIBERTY DEFENSE. It trades about 0.05 of its potential returns per unit of risk. LIBERTY DEFENSE H is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 80.00 in LIBERTY DEFENSE H on October 16, 2024 and sell it today you would lose (24.00) from holding LIBERTY DEFENSE H or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESTERN DIGITAL vs. LIBERTY DEFENSE H
Performance |
| Timeline |
| WESTERN DIGITAL |
| LIBERTY DEFENSE H |
WESTERN DIGITAL and LIBERTY DEFENSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTERN DIGITAL and LIBERTY DEFENSE
The main advantage of trading using opposite WESTERN DIGITAL and LIBERTY DEFENSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTERN DIGITAL position performs unexpectedly, LIBERTY DEFENSE 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 LIBERTY DEFENSE will offset losses from the drop in LIBERTY DEFENSE's long position.| WESTERN DIGITAL vs. CDN IMPERIAL BANK | WESTERN DIGITAL vs. Synchrony Financial | WESTERN DIGITAL vs. Webster Financial | WESTERN DIGITAL vs. Fast Retailing Co |
| LIBERTY DEFENSE vs. ASSA ABLOY AB | LIBERTY DEFENSE vs. Halma plc | LIBERTY DEFENSE vs. Allegion plc | LIBERTY DEFENSE vs. Superior Plus Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |