Correlation Between Chemours and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Chemours 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 Chemours and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and Westinghouse Air Brake, you can compare the effects of market volatilities on Chemours 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 Chemours with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and Westinghouse Air.
Diversification Opportunities for Chemours and Westinghouse Air
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chemours and Westinghouse is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co 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 Chemours 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 Chemours Co 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 Chemours i.e., Chemours and Westinghouse Air go up and down completely randomly.
Pair Corralation between Chemours and Westinghouse Air
Allowing for the 90-day total investment horizon Chemours Co is expected to generate 3.44 times more return on investment than Westinghouse Air. However, Chemours is 3.44 times more volatile than Westinghouse Air Brake. It trades about 0.21 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.18 per unit of risk. If you would invest 1,824 in Chemours Co on August 27, 2024 and sell it today you would earn a total of 329.00 from holding Chemours Co or generate 18.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. Westinghouse Air Brake
Performance |
| Timeline |
| Chemours |
| Westinghouse Air Brake |
Chemours and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and Westinghouse Air
The main advantage of trading using opposite Chemours and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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