Correlation Between NETGEAR and Western Digital

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

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

Diversification Opportunities for NETGEAR and Western Digital

0.2

Correlation Coefficient

NETGEAR  Western Digital

Modest diversification

The 3 months correlation between NETGEAR and Western is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and Western Digital go up and down completely randomly.

Pair Corralation between NETGEAR and Western Digital

Given the investment horizon of 90 days NETGEAR is expected to generate 21.62 times less return on investment than Western Digital. In addition to that, NETGEAR is 1.07 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 0.36 per unit of volatility. If you would invest  6,570  in Western Digital on July 2, 2025 and sell it today you would earn a total of  4,118  from holding Western Digital or generate 62.68% return on investment over 90 days.

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

NETGEAR  vs.  Western Digital

NETGEAR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, NETGEAR is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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. In spite of rather weak fundamental indicators, Western Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and Western Digital

The main advantage of trading using opposite NETGEAR and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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 NETGEAR 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.