Correlation Between Western Digital and Country Garden
Can any of the company-specific risk be diversified away by investing in both Western Digital and Country Garden 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 Country Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Country Garden Holdings, you can compare the effects of market volatilities on Western Digital and Country Garden 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 Country Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Country Garden.
Diversification Opportunities for Western Digital and Country Garden
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Country is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings 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 Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of Western Digital i.e., Western Digital and Country Garden go up and down completely randomly.
Pair Corralation between Western Digital and Country Garden
Considering the 90-day investment horizon Western Digital is expected to generate 28.96 times less return on investment than Country Garden. But when comparing it to its historical volatility, Western Digital is 20.46 times less risky than Country Garden. It trades about 0.08 of its potential returns per unit of risk. Country Garden Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Country Garden Holdings on September 12, 2024 and sell it today you would lose (2.00) from holding Country Garden Holdings or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. Country Garden Holdings
Performance |
| Timeline |
| Western Digital |
| Country Garden Holdings |
Western Digital and Country Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Country Garden
The main advantage of trading using opposite Western Digital and Country Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Country Garden 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 Country Garden will offset losses from the drop in Country Garden's long position.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| Country Garden vs. Park Electrochemical | Country Garden vs. The Mosaic | Country Garden vs. Lululemon Athletica | Country Garden vs. The Gap, |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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