Correlation Between Beyond and Western Digital

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

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

Diversification Opportunities for Beyond and Western Digital

0.19

Correlation Coefficient

Beyond  Western Digital

Average diversification

The 3 months correlation between Beyond and Western is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Inc and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Beyond 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 Beyond Inc 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 Beyond i.e., Beyond and Western Digital go up and down completely randomly.

Pair Corralation between Beyond and Western Digital

Given the investment horizon of 90 days Beyond Inc is expected to under-perform the Western Digital. In addition to that, Beyond is 1.24 times more volatile than Western Digital. It trades about -0.78 of its total potential returns per unit of risk. Western Digital is currently generating about 0.1 per unit of volatility. If you would invest  6,824  in Western Digital on January 28, 2024 and sell it today you would earn a total of  312.00  from holding Western Digital or generate 4.57% return on investment over 90 days.

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

Beyond Inc  vs.  Western Digital

Beyond Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Beyond is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Western Digital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 10 (%) 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.

Pair Trading with Beyond and Western Digital

The main advantage of trading using opposite Beyond and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond 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 Beyond Inc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.