Correlation Between Acumen Pharmaceuticals and Western Digital

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Can any of the company-specific risk be diversified away by investing in both Acumen Pharmaceuticals 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 Acumen Pharmaceuticals and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acumen Pharmaceuticals and Western Digital, you can compare the effects of market volatilities on Acumen Pharmaceuticals 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 Acumen Pharmaceuticals with a short position of Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acumen Pharmaceuticals and Western Digital.

Diversification Opportunities for Acumen Pharmaceuticals and Western Digital

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Acumen and Western is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Acumen Pharmaceuticals and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Acumen Pharmaceuticals 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 Acumen Pharmaceuticals 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 Acumen Pharmaceuticals i.e., Acumen Pharmaceuticals and Western Digital go up and down completely randomly.

Pair Corralation between Acumen Pharmaceuticals and Western Digital

Given the investment horizon of 90 days Acumen Pharmaceuticals is expected to under-perform the Western Digital. In addition to that, Acumen Pharmaceuticals is 2.52 times more volatile than Western Digital. It trades about -0.02 of its total potential returns per unit of risk. Western Digital is currently generating about -0.02 per unit of volatility. If you would invest  5,302  in Western Digital on September 7, 2022 and sell it today you would lose (1,823)  from holding Western Digital or give up 34.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy72.78%
ValuesDaily Returns

Acumen Pharmaceuticals  vs.  Western Digital

 Performance (%) 
       Timeline  
Acumen Pharmaceuticals 
Acumen Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Acumen Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Acumen Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Acumen Price Channel

Western Digital 
Western Performance
0 of 100
Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

Western Price Channel

Acumen Pharmaceuticals and Western Digital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acumen Pharmaceuticals and Western Digital

The main advantage of trading using opposite Acumen Pharmaceuticals and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acumen Pharmaceuticals 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.
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The idea behind Acumen Pharmaceuticals 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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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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