Correlation Between Western Digital and Citizens Bancorp
Can any of the company-specific risk be diversified away by investing in both Western Digital and Citizens Bancorp 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 Citizens Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Citizens Bancorp Investment, you can compare the effects of market volatilities on Western Digital and Citizens Bancorp 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 Citizens Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Citizens Bancorp.
Diversification Opportunities for Western Digital and Citizens Bancorp
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Citizens is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv 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 Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of Western Digital i.e., Western Digital and Citizens Bancorp go up and down completely randomly.
Pair Corralation between Western Digital and Citizens Bancorp
Considering the 90-day investment horizon Western Digital is expected to generate 1.09 times more return on investment than Citizens Bancorp. However, Western Digital is 1.09 times more volatile than Citizens Bancorp Investment. It trades about 0.12 of its potential returns per unit of risk. Citizens Bancorp Investment is currently generating about 0.09 per unit of risk. If you would invest 6,702 in Western Digital on August 31, 2024 and sell it today you would earn a total of 448.00 from holding Western Digital or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. Citizens Bancorp Investment
Performance |
| Timeline |
| Western Digital |
| Citizens Bancorp Inv |
Western Digital and Citizens Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Citizens Bancorp
The main advantage of trading using opposite Western Digital and Citizens Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Citizens Bancorp 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 Citizens Bancorp will offset losses from the drop in Citizens Bancorp's long position.| Western Digital vs. RLJ Lodging Trust | Western Digital vs. Aquagold International | Western Digital vs. Stepstone Group | Western Digital vs. Morningstar Unconstrained Allocation |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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