Correlation Between Goldcorp and Western Digital

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

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

Diversification Opportunities for Goldcorp and Western Digital

0.0

Correlation Coefficient

Goldcorp  Western Digital

Pay attention - limited upside

The 3 months correlation between Goldcorp and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Goldcorp and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Goldcorp 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 Goldcorp 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 Goldcorp i.e., Goldcorp and Western Digital go up and down completely randomly.

Pair Corralation between Goldcorp and Western Digital

If you would invest  5,746  in Western Digital on February 28, 2024 and sell it today you would earn a total of  1,735  from holding Western Digital or generate 30.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Goldcorp  vs.  Western Digital

Goldcorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldcorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Goldcorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Western Digital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Western Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldcorp and Western Digital

The main advantage of trading using opposite Goldcorp and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldcorp 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 Goldcorp 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.