Correlation Between Western Digital and Cricut

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

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

Diversification Opportunities for Western Digital and Cricut

-0.09

Correlation Coefficient

Western Digital  Cricut

Good diversification

The 3 months correlation between Western and Cricut is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Cricut Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cricut Inc 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 Cricut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cricut Inc has no effect on the direction of Western Digital i.e., Western Digital and Cricut go up and down completely randomly.

Pair Corralation between Western Digital and Cricut

Considering the 90-day investment horizon Western Digital is expected to under-perform the Cricut. In addition to that, Western Digital is 1.02 times more volatile than Cricut Inc. It trades about -0.16 of its total potential returns per unit of risk. Cricut Inc is currently generating about 0.28 per unit of volatility. 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

Western Digital  vs.  Cricut Inc

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.

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.

Pair Trading with Western Digital and Cricut

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

The idea behind Western Digital and Cricut Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.