Correlation Between Western Digital and SunPower
Can any of the company-specific risk be diversified away by investing in both Western Digital and SunPower 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 SunPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and SunPower, you can compare the effects of market volatilities on Western Digital and SunPower 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 SunPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and SunPower.
Diversification Opportunities for Western Digital and SunPower
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and SunPower is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and SunPower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunPower 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 SunPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunPower has no effect on the direction of Western Digital i.e., Western Digital and SunPower go up and down completely randomly.
Pair Corralation between Western Digital and SunPower
Considering the 90-day investment horizon Western Digital is expected to generate 0.51 times more return on investment than SunPower. However, Western Digital is 1.98 times less risky than SunPower. It trades about 0.16 of its potential returns per unit of risk. SunPower is currently generating about -0.22 per unit of risk. If you would invest 6,072 in Western Digital on January 20, 2024 and sell it today you would earn a total of 533.00 from holding Western Digital or generate 8.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Western Digital vs. SunPower
Performance |
Timeline |
Western Digital |
SunPower |
Western Digital and SunPower Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Digital and SunPower
The main advantage of trading using opposite Western Digital and SunPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital position performs unexpectedly, SunPower 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 SunPower will offset losses from the drop in SunPower's long position.Western Digital vs. LG Display Co | Western Digital vs. Sony Corp | Western Digital vs. Sonos Inc | Western Digital vs. Vizio Holding Corp |
SunPower vs. Enphase Energy | SunPower vs. First Solar | SunPower vs. Sunnova Energy International | SunPower vs. SolarEdge Technologies |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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