Correlation Between Cricut and Western Digital

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

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

Diversification Opportunities for Cricut and Western Digital

-0.09

Correlation Coefficient

Cricut  Western Digital

Good diversification

The 3 months correlation between Cricut and Western is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cricut Inc and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Cricut 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 Cricut Inc 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 Cricut i.e., Cricut and Western Digital go up and down completely randomly.

Pair Corralation between Cricut and Western Digital

Given the investment horizon of 90 days Cricut Inc is expected to generate 0.98 times more return on investment than Western Digital. However, Cricut Inc is 1.02 times less risky than Western Digital. It trades about 0.28 of its potential returns per unit of risk. Western Digital is currently generating about -0.16 per unit of risk. If you would invest  510.00  in Cricut Inc on September 23, 2024 and sell it today you would earn a total of  83.00  from holding Cricut Inc or generate 16.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cricut Inc  vs.  Western Digital

Cricut Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cricut Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Western Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Cricut and Western Digital

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

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.