Correlation Between Western Digital and Gelesis Holdings

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

By analyzing existing cross correlation between Western Digital and Gelesis Holdings, you can compare the effects of market volatilities on Western Digital and Gelesis Holdings 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 Gelesis Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Gelesis Holdings.

Diversification Opportunities for Western Digital and Gelesis Holdings

0.0

Correlation Coefficient

Western Digital  Gelesis Holdings

Pay attention - limited upside

The 3 months correlation between Western and Gelesis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Gelesis Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gelesis Holdings 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 Gelesis Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gelesis Holdings has no effect on the direction of Western Digital i.e., Western Digital and Gelesis Holdings go up and down completely randomly.

Pair Corralation between Western Digital and Gelesis Holdings

If you would invest  6,325  in Western Digital on September 12, 2024 and sell it today you would earn a total of  557.00  from holding Western Digital or generate 8.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Western Digital  vs.  Gelesis Holdings

Western Digital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Western Digital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gelesis Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gelesis Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Gelesis Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Western Digital and Gelesis Holdings

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

The idea behind Western Digital and Gelesis Holdings 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 Stocks Directory module to find actively traded stocks across global markets.