Correlation Between Western Digital and Marti Technologies

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

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

Diversification Opportunities for Western Digital and Marti Technologies

0.23

Correlation Coefficient

Western Digital  Marti Technologies

Modest diversification

The 3 months correlation between Western and Marti is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Marti Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marti Technologies 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 Marti Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marti Technologies has no effect on the direction of Western Digital i.e., Western Digital and Marti Technologies go up and down completely randomly.

Pair Corralation between Western Digital and Marti Technologies

Considering the 90-day investment horizon Western Digital is expected to under-perform the Marti Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Western Digital is 2.0 times less risky than Marti Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The Marti Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  339.00  in Marti Technologies on December 27, 2024 and sell it today you would lose (14.00) from holding Marti Technologies or give up 4.13% of portfolio value over 90 days.

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

Western Digital  vs.  Marti Technologies

Western Digital

Risk-Adjusted Performance

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 weak 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.

Marti Technologies

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marti Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Marti Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Western Digital and Marti Technologies

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

The idea behind Western Digital and Marti Technologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.