Correlation Between Digimarc and Western

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

By analyzing existing cross correlation between Digimarc and Western Digital 475, you can compare the effects of market volatilities on Digimarc and Western 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 Digimarc with a short position of Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and Western.

Diversification Opportunities for Digimarc and Western

0.43

Correlation Coefficient

Digimarc  Western

Very weak diversification

The 3 months correlation between Digimarc and Western is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Western Digital 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital 475 and Digimarc 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 Digimarc are associated (or correlated) with Western. 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 475 has no effect on the direction of Digimarc i.e., Digimarc and Western go up and down completely randomly.

Pair Corralation between Digimarc and Western

Given the investment horizon of 90 days Digimarc is expected to under-perform the Western. In addition to that, Digimarc is 24.47 times more volatile than Western Digital 475. It trades about -0.2 of its total potential returns per unit of risk. Western Digital 475 is currently generating about -0.06 per unit of volatility. If you would invest  9,883  in Western Digital 475 on December 30, 2024 and sell it today you would lose (108.00) from holding Western Digital 475 or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Digimarc  vs.  Western Digital 475

Digimarc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digimarc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Western Digital 475

Risk-Adjusted Performance

Weak

Over the last 90 days Western Digital 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Western is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Digimarc and Western

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

The idea behind Digimarc and Western Digital 475 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 Global Correlations module to find global opportunities by holding instruments from different markets.