Correlation Between Western Digital and Genfit

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

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

Diversification Opportunities for Western Digital and Genfit

0.2

Correlation Coefficient

Western Digital  Genfit

Modest diversification

The 3 months correlation between Western and Genfit is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit 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 Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of Western Digital i.e., Western Digital and Genfit go up and down completely randomly.

Pair Corralation between Western Digital and Genfit

Considering the 90-day investment horizon Western Digital is expected to generate 0.64 times more return on investment than Genfit. However, Western Digital is 1.57 times less risky than Genfit. It trades about 0.1 of its potential returns per unit of risk. Genfit is currently generating about -0.17 per unit of risk. If you would invest  6,644  in Western Digital on September 5, 2024 and sell it today you would earn a total of  590.00  from holding Western Digital or generate 8.88% 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.  Genfit

Western Digital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Western Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Genfit

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genfit are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Genfit is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Western Digital and Genfit

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

The idea behind Western Digital and Genfit 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.