Correlation Between Mhlbauer Holding and Western Digital

Can any of the company-specific risk be diversified away by investing in both Mhlbauer Holding and Western Digital 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 Mhlbauer Holding and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mhlbauer Holding AG and Western Digital, you can compare the effects of market volatilities on Mhlbauer Holding and Western Digital 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 Mhlbauer Holding with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mhlbauer Holding and Western Digital.

Diversification Opportunities for Mhlbauer Holding and Western Digital

-0.63

Correlation Coefficient

Mhlbauer Holding  Western Digital

Excellent diversification

The 3 months correlation between Mhlbauer and Western is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mhlbauer Holding AG and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Mhlbauer Holding 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 Mhlbauer Holding AG are associated (or correlated) with Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Mhlbauer Holding i.e., Mhlbauer Holding and Western Digital go up and down completely randomly.

Pair Corralation between Mhlbauer Holding and Western Digital

Assuming the 90 days trading horizon Mhlbauer Holding AG is expected to under-perform the Western Digital. But the stock apears to be less risky and, when comparing its historical volatility, Mhlbauer Holding AG is 1.43 times less risky than Western Digital. The stock trades about -0.2 of its potential returns per unit of risk. The Western Digital is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6,037  in Western Digital on September 4, 2024 and sell it today you would earn a total of  927.00  from holding Western Digital or generate 15.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mhlbauer Holding AG  vs.  Western Digital

Mhlbauer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mhlbauer Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Western Digital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Western Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mhlbauer Holding and Western Digital

The main advantage of trading using opposite Mhlbauer Holding and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mhlbauer Holding position performs unexpectedly, Western Digital 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 Western Digital will offset losses from the drop in Western Digital's long position.

The idea behind Mhlbauer Holding AG and Western Digital 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.