Correlation Between Seagate Technology and Evercel

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

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

Diversification Opportunities for Seagate Technology and Evercel

-0.5

Correlation Coefficient

Seagate Technology  Evercel

Very good diversification

The 3 months correlation between Seagate and Evercel is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and Evercel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evercel and Seagate Technology 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 Seagate Technology PLC are associated (or correlated) with Evercel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evercel has no effect on the direction of Seagate Technology i.e., Seagate Technology and Evercel go up and down completely randomly.

Pair Corralation between Seagate Technology and Evercel

If you would invest  8,587  in Seagate Technology PLC on March 19, 2024 and sell it today you would earn a total of  2,052  from holding Seagate Technology PLC or generate 23.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.92%
Values	Daily Returns

Seagate Technology PLC  vs.  Evercel

Seagate Technology PLC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seagate Technology PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Seagate Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Evercel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Seagate Technology and Evercel

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

The idea behind Seagate Technology PLC and Evercel 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.