Correlation Between Afya and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Afya 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 Afya and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afya and Westinghouse Air Brake, you can compare the effects of market volatilities on Afya 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 Afya with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afya and Westinghouse Air.
Diversification Opportunities for Afya and Westinghouse Air
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Afya and Westinghouse is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Afya 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 Afya 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 Afya 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 Afya i.e., Afya and Westinghouse Air go up and down completely randomly.
Pair Corralation between Afya and Westinghouse Air
Given the investment horizon of 90 days Afya is expected to generate 3.68 times less return on investment than Westinghouse Air. In addition to that, Afya is 1.74 times more volatile than Westinghouse Air Brake. It trades about 0.03 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 19,066 in Westinghouse Air Brake on August 28, 2024 and sell it today you would earn a total of 862.00 from holding Westinghouse Air Brake or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afya vs. Westinghouse Air Brake
Performance |
| Timeline |
| Afya |
| Westinghouse Air Brake |
Afya and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afya and Westinghouse Air
The main advantage of trading using opposite Afya and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afya 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.| Afya vs. American Public Education | Afya vs. Lincoln Educational Services | Afya vs. Adtalem Global Education |
| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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