Correlation Between Western Digital and BGC
Can any of the company-specific risk be diversified away by investing in both Western Digital and BGC 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 BGC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and BGC Group, you can compare the effects of market volatilities on Western Digital and BGC 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 BGC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and BGC.
Diversification Opportunities for Western Digital and BGC
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and BGC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and BGC Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGC Group 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 BGC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGC Group has no effect on the direction of Western Digital i.e., Western Digital and BGC go up and down completely randomly.
Pair Corralation between Western Digital and BGC
Considering the 90-day investment horizon Western Digital is expected to generate 1.22 times less return on investment than BGC. But when comparing it to its historical volatility, Western Digital is 1.0 times less risky than BGC. It trades about 0.08 of its potential returns per unit of risk. BGC Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 462.00 in BGC Group on September 2, 2024 and sell it today you would earn a total of 512.00 from holding BGC Group or generate 110.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. BGC Group
Performance |
| Timeline |
| Western Digital |
| BGC Group |
Western Digital and BGC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and BGC
The main advantage of trading using opposite Western Digital and BGC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, BGC 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 BGC will offset losses from the drop in BGC's long position.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| BGC vs. BTB Real Estate | BGC vs. Old Republic International | BGC vs. Bank of America | BGC vs. FactSet Research Systems |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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