Correlation Between Central Japan and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Central Japan 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 Central Japan and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Japan Railway and Westinghouse Air Brake, you can compare the effects of market volatilities on Central Japan 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 Central Japan with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Japan and Westinghouse Air.
Diversification Opportunities for Central Japan and Westinghouse Air
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Central and Westinghouse is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Central Japan Railway 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 Central Japan 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 Central Japan Railway 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 Central Japan i.e., Central Japan and Westinghouse Air go up and down completely randomly.
Pair Corralation between Central Japan and Westinghouse Air
If you would invest 18,779 in Westinghouse Air Brake on September 1, 2024 and sell it today you would earn a total of 1,283 from holding Westinghouse Air Brake or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Central Japan Railway vs. Westinghouse Air Brake
Performance |
| Timeline |
| Central Japan Railway |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Westinghouse Air Brake |
Central Japan and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Japan and Westinghouse Air
The main advantage of trading using opposite Central Japan and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Japan 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.| Central Japan vs. West Japan Railway | Central Japan vs. Central Japan Railway | Central Japan vs. LB Foster |
| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. Norfolk Southern |
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 Correlations module to find global opportunities by holding instruments from different markets.
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