Correlation Between Western Digital and Chart Industries
Can any of the company-specific risk be diversified away by investing in both Western Digital and Chart Industries 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 Chart Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Chart Industries, you can compare the effects of market volatilities on Western Digital and Chart Industries 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 Chart Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Chart Industries.
Diversification Opportunities for Western Digital and Chart Industries
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Chart is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Western Digital i.e., Western Digital and Chart Industries go up and down completely randomly.
Pair Corralation between Western Digital and Chart Industries
Considering the 90-day investment horizon Western Digital is expected to generate 0.71 times more return on investment than Chart Industries. However, Western Digital is 1.4 times less risky than Chart Industries. It trades about 0.07 of its potential returns per unit of risk. Chart Industries is currently generating about 0.05 per unit of risk. If you would invest 3,630 in Western Digital on September 3, 2024 and sell it today you would earn a total of 3,669 from holding Western Digital or generate 101.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. Chart Industries
Performance |
| Timeline |
| Western Digital |
| Chart Industries |
Western Digital and Chart Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Chart Industries
The main advantage of trading using opposite Western Digital and Chart Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Chart Industries 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 Chart Industries will offset losses from the drop in Chart Industries' long position.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| Chart Industries vs. Crane NXT Co | Chart Industries vs. Donaldson | Chart Industries vs. ITT Inc | Chart Industries vs. Franklin Electric Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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