Correlation Between WESTERN DIGITAL and X Fab

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

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

Diversification Opportunities for WESTERN DIGITAL and X Fab

0.96

Correlation Coefficient

WESTERN DIGITAL  X Fab

Almost no diversification

The 3 months correlation between WESTERN and XFB is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN DIGITAL and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of WESTERN DIGITAL i.e., WESTERN DIGITAL and X Fab go up and down completely randomly.

Pair Corralation between WESTERN DIGITAL and X Fab

Assuming the 90 days trading horizon WESTERN DIGITAL is expected to generate 0.75 times more return on investment than X Fab. However, WESTERN DIGITAL is 1.33 times less risky than X Fab. It trades about 0.39 of its potential returns per unit of risk. X Fab Silicon is currently generating about 0.2 per unit of risk. If you would invest  3,592  in WESTERN DIGITAL on April 25, 2025 and sell it today you would earn a total of  2,285  from holding WESTERN DIGITAL or generate 63.61% return on investment over 90 days.

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

WESTERN DIGITAL   vs.  X Fab Silicon

WESTERN DIGITAL

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in WESTERN DIGITAL are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, WESTERN DIGITAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

X Fab Silicon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in X Fab Silicon are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, X Fab reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WESTERN DIGITAL and X Fab

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

The idea behind WESTERN DIGITAL and X Fab Silicon 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.