Correlation Between Western Digital and AstroNova
Can any of the company-specific risk be diversified away by investing in both Western Digital and AstroNova 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 AstroNova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and AstroNova, you can compare the effects of market volatilities on Western Digital and AstroNova 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 AstroNova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and AstroNova.
Diversification Opportunities for Western Digital and AstroNova
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and AstroNova is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and AstroNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstroNova 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 AstroNova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstroNova has no effect on the direction of Western Digital i.e., Western Digital and AstroNova go up and down completely randomly.
Pair Corralation between Western Digital and AstroNova
Considering the 90-day investment horizon Western Digital is expected to generate 1.04 times more return on investment than AstroNova. However, Western Digital is 1.04 times more volatile than AstroNova. It trades about 0.04 of its potential returns per unit of risk. AstroNova is currently generating about -0.06 per unit of risk. If you would invest 5,223 in Western Digital on November 9, 2024 and sell it today you would earn a total of 1,225 from holding Western Digital or generate 23.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. AstroNova
Performance |
| Timeline |
| Western Digital |
| AstroNova |
Western Digital and AstroNova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and AstroNova
The main advantage of trading using opposite Western Digital and AstroNova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, AstroNova 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 AstroNova will offset losses from the drop in AstroNova's long position.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| AstroNova vs. Key Tronic | AstroNova vs. Identiv | AstroNova vs. Red Cat Holdings | AstroNova vs. TransAct Technologies Incorporated |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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