Correlation Between Pure Storage and WESTERN NEW

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

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

Diversification Opportunities for Pure Storage and WESTERN NEW

0.7

Correlation Coefficient

Pure Storage  WESTERN NEW

Poor diversification

The 3 months correlation between Pure and WESTERN is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and WESTERN NEW ENGL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN NEW ENGL and Pure Storage 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 Pure Storage are associated (or correlated) with WESTERN NEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN NEW ENGL has no effect on the direction of Pure Storage i.e., Pure Storage and WESTERN NEW go up and down completely randomly.

Pair Corralation between Pure Storage and WESTERN NEW

Assuming the 90 days horizon Pure Storage is expected to generate 1.59 times more return on investment than WESTERN NEW. However, Pure Storage is 1.59 times more volatile than WESTERN NEW ENGL. It trades about 0.07 of its potential returns per unit of risk. WESTERN NEW ENGL is currently generating about 0.02 per unit of risk. If you would invest  2,686  in Pure Storage on October 23, 2024 and sell it today you would earn a total of  3,804  from holding Pure Storage or generate 141.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Pure Storage  vs.  WESTERN NEW ENGL

Pure Storage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

WESTERN NEW ENGL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN NEW ENGL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WESTERN NEW reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pure Storage and WESTERN NEW

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

The idea behind Pure Storage and WESTERN NEW ENGL 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.