Correlation Between Western Digital and Chiba Bank

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

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

Diversification Opportunities for Western Digital and Chiba Bank

0.91

Correlation Coefficient

Western Digital  Chiba Bank

Almost no diversification

The 3 months correlation between Western and Chiba is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Chiba Bank Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank 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 Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of Western Digital i.e., Western Digital and Chiba Bank go up and down completely randomly.

Pair Corralation between Western Digital and Chiba Bank

Considering the 90-day investment horizon Western Digital is expected to generate 1.75 times more return on investment than Chiba Bank. However, Western Digital is 1.75 times more volatile than Chiba Bank Ltd. It trades about 0.46 of its potential returns per unit of risk. Chiba Bank Ltd is currently generating about 0.16 per unit of risk. If you would invest  4,422  in Western Digital on May 7, 2025 and sell it today you would earn a total of  3,307  from holding Western Digital or generate 74.79% 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.  Chiba Bank Ltd

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 36 (%) 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.

Chiba Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chiba Bank Ltd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chiba Bank may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Western Digital and Chiba Bank

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

The idea behind Western Digital and Chiba Bank Ltd 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.