Correlation Between Seagate Technology and Immersion

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

By analyzing existing cross correlation between Seagate Technology PLC and Immersion, you can compare the effects of market volatilities on Seagate Technology and Immersion 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 Seagate Technology with a short position of Immersion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagate Technology and Immersion.

Diversification Opportunities for Seagate Technology and Immersion

-0.49

Correlation Coefficient

Seagate Technology  Immersion

Very good diversification

The 3 months correlation between Seagate and Immersion is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and Immersion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immersion and Seagate Technology 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 Seagate Technology PLC are associated (or correlated) with Immersion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immersion has no effect on the direction of Seagate Technology i.e., Seagate Technology and Immersion go up and down completely randomly.

Pair Corralation between Seagate Technology and Immersion

Considering the 90-day investment horizon Seagate Technology PLC is expected to under-perform the Immersion. But the stock apears to be less risky and, when comparing its historical volatility, Seagate Technology PLC is 1.27 times less risky than Immersion. The stock trades about -0.07 of its potential returns per unit of risk. The Immersion is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  884.00  in Immersion on September 19, 2024 and sell it today you would earn a total of  89.00  from holding Immersion or generate 10.07% return on investment over 90 days.

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

Seagate Technology PLC  vs.  Immersion

Seagate Technology PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagate Technology PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Immersion

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Immersion are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Immersion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Seagate Technology and Immersion

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

The idea behind Seagate Technology PLC and Immersion 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.