Correlation Between Western Digital and LENSAR
Can any of the company-specific risk be diversified away by investing in both Western Digital and LENSAR 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 LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and LENSAR Inc, you can compare the effects of market volatilities on Western Digital and LENSAR 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 LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and LENSAR.
Diversification Opportunities for Western Digital and LENSAR
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and LENSAR is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc 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 LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Western Digital i.e., Western Digital and LENSAR go up and down completely randomly.
Pair Corralation between Western Digital and LENSAR
Considering the 90-day investment horizon Western Digital is expected to generate 118.97 times less return on investment than LENSAR. But when comparing it to its historical volatility, Western Digital is 1.99 times less risky than LENSAR. It trades about 0.0 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 560.00 in LENSAR Inc on August 27, 2024 and sell it today you would earn a total of 178.00 from holding LENSAR Inc or generate 31.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. LENSAR Inc
Performance |
| Timeline |
| Western Digital |
| LENSAR Inc |
Western Digital and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and LENSAR
The main advantage of trading using opposite Western Digital and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR's long position.| Western Digital vs. D Wave Quantum | Western Digital vs. Rigetti Computing | Western Digital vs. Cricut Inc | Western Digital vs. Quantum Computing |
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 Stocks Directory module to find actively traded stocks across global markets.
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