Correlation Between Western Digital and Ecovyst

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Can any of the company-specific risk be diversified away by investing in both Western Digital and Ecovyst 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 Ecovyst into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Ecovyst, you can compare the effects of market volatilities on Western Digital and Ecovyst 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 Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Ecovyst.

Diversification Opportunities for Western Digital and Ecovyst

WesternEcovystDiversified AwayWesternEcovystDiversified Away100%
0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Western and Ecovyst is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst 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 Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of Western Digital i.e., Western Digital and Ecovyst go up and down completely randomly.

Pair Corralation between Western Digital and Ecovyst

Considering the 90-day investment horizon Western Digital is expected to generate 0.92 times more return on investment than Ecovyst. However, Western Digital is 1.09 times less risky than Ecovyst. It trades about 0.01 of its potential returns per unit of risk. Ecovyst is currently generating about -0.03 per unit of risk. If you would invest  6,815  in Western Digital on November 21, 2024 and sell it today you would earn a total of  24.00  from holding Western Digital or generate 0.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Western Digital  vs.  Ecovyst

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.15WDC ECVT
       Timeline  
Western Digital 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Western Digital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6062646668707274
Ecovyst 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ecovyst is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7.27.47.67.888.28.48.6

Western Digital and Ecovyst Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.03-6.01-4.0-1.980.03362.014.036.048.06 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15WDC ECVT
       Returns  

Pair Trading with Western Digital and Ecovyst

The main advantage of trading using opposite Western Digital and Ecovyst positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Ecovyst 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 Ecovyst will offset losses from the drop in Ecovyst's long position.
The idea behind Western Digital and Ecovyst pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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