Correlation Between Spirent Communications and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Westinghouse Air Brake, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Westinghouse Air.
Diversification Opportunities for Spirent Communications and Westinghouse Air
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spirent and Westinghouse is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc 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 Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Westinghouse Air go up and down completely randomly.
Pair Corralation between Spirent Communications and Westinghouse Air
Assuming the 90 days horizon Spirent Communications is expected to generate 11.58 times less return on investment than Westinghouse Air. In addition to that, Spirent Communications is 1.43 times more volatile than Westinghouse Air Brake. It trades about 0.01 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.22 per unit of volatility. If you would invest 14,045 in Westinghouse Air Brake on November 7, 2024 and sell it today you would earn a total of 5,850 from holding Westinghouse Air Brake or generate 41.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Westinghouse Air Brake
Performance |
| Timeline |
| Spirent Communications |
| Westinghouse Air Brake |
Spirent Communications and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Westinghouse Air
The main advantage of trading using opposite Spirent Communications and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. United Microelectronics Corp | Spirent Communications vs. ALTAIR RES INC | Spirent Communications vs. LG Electronics | Spirent Communications vs. Methode Electronics |
| Westinghouse Air vs. VIENNA INSURANCE GR | Westinghouse Air vs. Reinsurance Group of | Westinghouse Air vs. USWE SPORTS AB | Westinghouse Air vs. The Hanover Insurance |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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