Correlation Between WESTERN DIGITAL and G-III Apparel

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

By analyzing existing cross correlation between WESTERN DIGITAL and G III Apparel Group, you can compare the effects of market volatilities on WESTERN DIGITAL and G-III Apparel 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 G-III Apparel. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTERN DIGITAL and G-III Apparel.

Diversification Opportunities for WESTERN DIGITAL and G-III Apparel

-0.01

Correlation Coefficient

WESTERN DIGITAL  G-III Apparel

Good diversification

The 3 months correlation between WESTERN and G-III is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN DIGITAL and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G-III Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of WESTERN DIGITAL i.e., WESTERN DIGITAL and G-III Apparel go up and down completely randomly.

Pair Corralation between WESTERN DIGITAL and G-III Apparel

Assuming the 90 days trading horizon WESTERN DIGITAL is expected to generate 1.52 times more return on investment than G-III Apparel. However, WESTERN DIGITAL is 1.52 times more volatile than G III Apparel Group. It trades about -0.15 of its potential returns per unit of risk. G III Apparel Group is currently generating about -0.23 per unit of risk. If you would invest  6,666  in WESTERN DIGITAL on October 12, 2024 and sell it today you would lose (494.00) from holding WESTERN DIGITAL or give up 7.41% of portfolio value over 90 days.

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

WESTERN DIGITAL  vs.  G III Apparel Group

WESTERN DIGITAL

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN DIGITAL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, WESTERN DIGITAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

G III Apparel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G III Apparel Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, G-III Apparel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WESTERN DIGITAL and G-III Apparel

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

The idea behind WESTERN DIGITAL and G III Apparel Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.