Correlation Between Consolidated Communications and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Consolidated 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 Consolidated 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 Consolidated Communications Holdings and Westinghouse Air Brake, you can compare the effects of market volatilities on Consolidated 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 Consolidated Communications with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consolidated Communications and Westinghouse Air.
Diversification Opportunities for Consolidated Communications and Westinghouse Air
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Consolidated and Westinghouse is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications Ho 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 Consolidated 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 Consolidated Communications Holdings 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 Consolidated Communications i.e., Consolidated Communications and Westinghouse Air go up and down completely randomly.
Pair Corralation between Consolidated Communications and Westinghouse Air
Assuming the 90 days horizon Consolidated Communications is expected to generate 2.47 times less return on investment than Westinghouse Air. But when comparing it to its historical volatility, Consolidated Communications Holdings is 1.76 times less risky than Westinghouse Air. It trades about 0.19 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 15,084 in Westinghouse Air Brake on August 29, 2024 and sell it today you would earn a total of 3,951 from holding Westinghouse Air Brake or generate 26.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consolidated Communications Ho vs. Westinghouse Air Brake
Performance |
| Timeline |
| Consolidated Communications |
| Westinghouse Air Brake |
Consolidated Communications and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consolidated Communications and Westinghouse Air
The main advantage of trading using opposite Consolidated Communications and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated 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.| Consolidated Communications vs. Verizon Communications | Consolidated Communications vs. ATT Inc | Consolidated Communications vs. ATT Inc | Consolidated Communications vs. Deutsche Telekom AG |
| Westinghouse Air vs. Union Pacific | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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