Correlation Between Seagate Technology and Pure Storage

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

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

Diversification Opportunities for Seagate Technology and Pure Storage

0.57

Correlation Coefficient

Seagate Technology  Pure Storage

Very weak diversification

The 3 months correlation between Seagate and Pure is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage and Seagate Technology 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 Seagate Technology PLC are associated (or correlated) with Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of Seagate Technology i.e., Seagate Technology and Pure Storage go up and down completely randomly.

Pair Corralation between Seagate Technology and Pure Storage

Considering the 90-day investment horizon Seagate Technology PLC is expected to generate 0.63 times more return on investment than Pure Storage. However, Seagate Technology PLC is 1.58 times less risky than Pure Storage. It trades about 0.03 of its potential returns per unit of risk. Pure Storage is currently generating about -0.11 per unit of risk. If you would invest  8,583  in Seagate Technology PLC on December 28, 2024 and sell it today you would earn a total of  167.00  from holding Seagate Technology PLC or generate 1.95% return on investment over 90 days.

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

Seagate Technology PLC  vs.  Pure Storage

Seagate Technology PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seagate Technology PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Seagate Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pure Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Seagate Technology and Pure Storage

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

The idea behind Seagate Technology PLC and Pure Storage 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .