Correlation Between Western Digital and SunOpta
Can any of the company-specific risk be diversified away by investing in both Western Digital and SunOpta 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 SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and SunOpta, you can compare the effects of market volatilities on Western Digital and SunOpta 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 SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and SunOpta.
Diversification Opportunities for Western Digital and SunOpta
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and SunOpta is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Western Digital i.e., Western Digital and SunOpta go up and down completely randomly.
Pair Corralation between Western Digital and SunOpta
Considering the 90-day investment horizon Western Digital is expected to generate 0.73 times more return on investment than SunOpta. However, Western Digital is 1.37 times less risky than SunOpta. It trades about 0.07 of its potential returns per unit of risk. SunOpta is currently generating about 0.01 per unit of risk. If you would invest 3,621 in Western Digital on September 2, 2024 and sell it today you would earn a total of 3,678 from holding Western Digital or generate 101.57% 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. SunOpta
Performance |
| Timeline |
| Western Digital |
| SunOpta |
Western Digital and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and SunOpta
The main advantage of trading using opposite Western Digital and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, SunOpta 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 SunOpta will offset losses from the drop in SunOpta's long position.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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