Correlation Between Gladstone Investment and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment and Westinghouse Air 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 Gladstone Investment and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and Westinghouse Air Brake, you can compare the effects of market volatilities on Gladstone Investment and Westinghouse Air 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 Gladstone Investment with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Westinghouse Air.
Diversification Opportunities for Gladstone Investment and Westinghouse Air
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gladstone and Westinghouse is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Westinghouse Air go up and down completely randomly.
Pair Corralation between Gladstone Investment and Westinghouse Air
Assuming the 90 days horizon Gladstone Investment is expected to generate 2.55 times less return on investment than Westinghouse Air. In addition to that, Gladstone Investment is 1.41 times more volatile than Westinghouse Air Brake. It trades about 0.05 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.18 per unit of volatility. If you would invest 18,645 in Westinghouse Air Brake on September 12, 2024 and sell it today you would earn a total of 770.00 from holding Westinghouse Air Brake or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. Westinghouse Air Brake
Performance |
| Timeline |
| Gladstone Investment |
| Westinghouse Air Brake |
Gladstone Investment and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Westinghouse Air
The main advantage of trading using opposite Gladstone Investment and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.| Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers ShortDAX | Gladstone Investment vs. Xtrackers LevDAX |
| Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB | Westinghouse Air vs. Norsk Hydro ASA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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