Correlation Between Textron and Western Digital

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

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

Diversification Opportunities for Textron and Western Digital

0.0

Correlation Coefficient

Textron  Western Digital

Pay attention - limited upside

The 3 months correlation between Textron and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Textron and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Textron 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 Textron 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 Textron i.e., Textron and Western Digital go up and down completely randomly.

Pair Corralation between Textron and Western Digital

If you would invest  69,993  in Western Digital on April 20, 2025 and sell it today you would earn a total of  48,007  from holding Western Digital or generate 68.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Textron  vs.  Western Digital

Textron

Risk-Adjusted Performance

Good

Over the last 90 days Textron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Textron is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Digital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Western Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Textron and Western Digital

The main advantage of trading using opposite Textron and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Textron 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 Textron 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.