Correlation Between Western Digital and HOLOGIC

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

By analyzing existing cross correlation between Western Digital and HOLOGIC INC 325, you can compare the effects of market volatilities on Western Digital and HOLOGIC 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 HOLOGIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and HOLOGIC.

Diversification Opportunities for Western Digital and HOLOGIC

0.07

Correlation Coefficient

Western Digital  HOLOGIC

Significant diversification

The 3 months correlation between Western and HOLOGIC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and HOLOGIC INC 325 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOLOGIC INC 325 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 HOLOGIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOLOGIC INC 325 has no effect on the direction of Western Digital i.e., Western Digital and HOLOGIC go up and down completely randomly.

Pair Corralation between Western Digital and HOLOGIC

Considering the 90-day investment horizon Western Digital is expected to under-perform the HOLOGIC. In addition to that, Western Digital is 10.03 times more volatile than HOLOGIC INC 325. It trades about -0.21 of its total potential returns per unit of risk. HOLOGIC INC 325 is currently generating about -0.29 per unit of volatility. If you would invest  9,184  in HOLOGIC INC 325 on September 25, 2024 and sell it today you would lose (128.00) from holding HOLOGIC INC 325 or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Western Digital  vs.  HOLOGIC INC 325

Western Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Western Digital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

HOLOGIC INC 325

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOLOGIC INC 325 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HOLOGIC INC 325 investors.

Pair Trading with Western Digital and HOLOGIC

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

The idea behind Western Digital and HOLOGIC INC 325 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.