Correlation Between Western Digital and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Western Digital and Lake Resources 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 Lake Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Lake Resources NL, you can compare the effects of market volatilities on Western Digital and Lake Resources 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 Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Lake Resources.
Diversification Opportunities for Western Digital and Lake Resources
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Lake is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL 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 Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Western Digital i.e., Western Digital and Lake Resources go up and down completely randomly.
Pair Corralation between Western Digital and Lake Resources
Considering the 90-day investment horizon Western Digital is expected to generate 0.26 times more return on investment than Lake Resources. However, Western Digital is 3.9 times less risky than Lake Resources. It trades about 0.06 of its potential returns per unit of risk. Lake Resources NL is currently generating about 0.01 per unit of risk. If you would invest 5,740 in Western Digital on August 29, 2024 and sell it today you would earn a total of 1,562 from holding Western Digital or generate 27.21% 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. Lake Resources NL
Performance |
| Timeline |
| Western Digital |
| Lake Resources NL |
Western Digital and Lake Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Lake Resources
The main advantage of trading using opposite Western Digital and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| Lake Resources vs. Eastman Kodak Co | Lake Resources vs. Old Dominion Freight | Lake Resources vs. Mesa Air Group | Lake Resources vs. Catalent |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |