Correlation Between FIH MOBILE and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both FIH MOBILE 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 FIH MOBILE and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIH MOBILE and Westinghouse Air Brake, you can compare the effects of market volatilities on FIH MOBILE 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 FIH MOBILE with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIH MOBILE and Westinghouse Air.
Diversification Opportunities for FIH MOBILE and Westinghouse Air
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIH and Westinghouse is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding FIH MOBILE 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 FIH MOBILE 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 FIH MOBILE 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 FIH MOBILE i.e., FIH MOBILE and Westinghouse Air go up and down completely randomly.
Pair Corralation between FIH MOBILE and Westinghouse Air
Assuming the 90 days trading horizon FIH MOBILE is expected to generate 1.51 times more return on investment than Westinghouse Air. However, FIH MOBILE is 1.51 times more volatile than Westinghouse Air Brake. It trades about 0.16 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.08 per unit of risk. If you would invest 10.00 in FIH MOBILE on October 30, 2024 and sell it today you would earn a total of 1.00 from holding FIH MOBILE or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIH MOBILE vs. Westinghouse Air Brake
Performance |
| Timeline |
| FIH MOBILE |
| Westinghouse Air Brake |
FIH MOBILE and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIH MOBILE and Westinghouse Air
The main advantage of trading using opposite FIH MOBILE and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIH MOBILE 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.| FIH MOBILE vs. NAKED WINES PLC | FIH MOBILE vs. Goodyear Tire Rubber | FIH MOBILE vs. Entravision Communications | FIH MOBILE vs. Kingdee International Software |
| Westinghouse Air vs. Penn National Gaming | Westinghouse Air vs. Chengdu PUTIAN Telecommunications | Westinghouse Air vs. MAVEN WIRELESS SWEDEN | Westinghouse Air vs. Singapore Telecommunications Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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