Correlation Between Western Digital and BTG Pactual
Can any of the company-specific risk be diversified away by investing in both Western Digital and BTG Pactual 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 BTG Pactual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and BTG Pactual Logstica, you can compare the effects of market volatilities on Western Digital and BTG Pactual 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 BTG Pactual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and BTG Pactual.
Diversification Opportunities for Western Digital and BTG Pactual
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and BTG is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and BTG Pactual Logstica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTG Pactual Logstica 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 BTG Pactual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTG Pactual Logstica has no effect on the direction of Western Digital i.e., Western Digital and BTG Pactual go up and down completely randomly.
Pair Corralation between Western Digital and BTG Pactual
Assuming the 90 days trading horizon Western Digital is expected to generate 2.51 times more return on investment than BTG Pactual. However, Western Digital is 2.51 times more volatile than BTG Pactual Logstica. It trades about 0.21 of its potential returns per unit of risk. BTG Pactual Logstica is currently generating about -0.3 per unit of risk. If you would invest 34,234 in Western Digital on June 30, 2024 and sell it today you would earn a total of 1,991 from holding Western Digital or generate 5.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Western Digital vs. BTG Pactual Logstica
Performance |
Timeline |
Western Digital |
BTG Pactual Logstica |
Western Digital and BTG Pactual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Digital and BTG Pactual
The main advantage of trading using opposite Western Digital and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, BTG Pactual 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 BTG Pactual will offset losses from the drop in BTG Pactual's long position.Western Digital vs. Arista Networks | Western Digital vs. Dell Technologies | Western Digital vs. Positivo Tecnologia SA |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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