Correlation Between AM EAGLE and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both AM EAGLE 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 AM EAGLE and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AM EAGLE OUTFITTERS and Westinghouse Air Brake, you can compare the effects of market volatilities on AM EAGLE 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 AM EAGLE with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Westinghouse Air.
Diversification Opportunities for AM EAGLE and Westinghouse Air
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between AFG and Westinghouse is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS 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 AM EAGLE 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 AM EAGLE OUTFITTERS 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 AM EAGLE i.e., AM EAGLE and Westinghouse Air go up and down completely randomly.
Pair Corralation between AM EAGLE and Westinghouse Air
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to under-perform the Westinghouse Air. In addition to that, AM EAGLE is 1.7 times more volatile than Westinghouse Air Brake. It trades about -0.04 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.12 per unit of volatility. If you would invest 15,038 in Westinghouse Air Brake on September 3, 2024 and sell it today you would earn a total of 4,037 from holding Westinghouse Air Brake or generate 26.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. Westinghouse Air Brake
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| Westinghouse Air Brake |
AM EAGLE and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and Westinghouse Air
The main advantage of trading using opposite AM EAGLE and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE 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.The idea behind AM EAGLE OUTFITTERS and Westinghouse Air Brake 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.| Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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