Correlation Between Western Digital and Church Dwight
Can any of the company-specific risk be diversified away by investing in both Western Digital and Church Dwight 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 Church Dwight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Church Dwight, you can compare the effects of market volatilities on Western Digital and Church Dwight 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 Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Church Dwight.
Diversification Opportunities for Western Digital and Church Dwight
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Church is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight 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 Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Western Digital i.e., Western Digital and Church Dwight go up and down completely randomly.
Pair Corralation between Western Digital and Church Dwight
Considering the 90-day investment horizon Western Digital is expected to generate 2.18 times more return on investment than Church Dwight. However, Western Digital is 2.18 times more volatile than Church Dwight. It trades about 0.07 of its potential returns per unit of risk. Church Dwight is currently generating about 0.07 per unit of risk. If you would invest 3,571 in Western Digital on August 30, 2024 and sell it today you would earn a total of 3,579 from holding Western Digital or generate 100.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. Church Dwight
Performance |
| Timeline |
| Western Digital |
| Church Dwight |
Western Digital and Church Dwight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Church Dwight
The main advantage of trading using opposite Western Digital and Church Dwight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Church Dwight 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 Church Dwight will offset losses from the drop in Church Dwight's long position.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| Church Dwight vs. Kimberly Clark | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Procter Gamble |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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