Correlation Between FORWARD AIR and Western Digital

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

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

Diversification Opportunities for FORWARD AIR and Western Digital

0.91

Correlation Coefficient

FORWARD AIR  Western Digital

Almost no diversification

The 3 months correlation between FORWARD and Western is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and FORWARD AIR 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 FORWARD AIR P are associated (or correlated) with Western Digital. 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 has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Western Digital go up and down completely randomly.

Pair Corralation between FORWARD AIR and Western Digital

Assuming the 90 days horizon FORWARD AIR P is expected to generate 1.62 times more return on investment than Western Digital. However, FORWARD AIR is 1.62 times more volatile than Western Digital. It trades about 0.23 of its potential returns per unit of risk. Western Digital is currently generating about 0.36 per unit of risk. If you would invest  1,250  in FORWARD AIR P on April 21, 2025 and sell it today you would earn a total of  1,065  from holding FORWARD AIR P or generate 85.2% return on investment over 90 days.

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

FORWARD AIR P  vs.  Western Digital

FORWARD AIR P

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FORWARD AIR P are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FORWARD AIR reported solid returns over the last few months and may actually be approaching a breakup point.

Western Digital

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Western Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORWARD AIR and Western Digital

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

The idea behind FORWARD AIR P and Western Digital 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.