Correlation Between Genfit and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Genfit 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 Genfit and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genfit and Westinghouse Air Brake, you can compare the effects of market volatilities on Genfit 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 Genfit with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genfit and Westinghouse Air.
Diversification Opportunities for Genfit and Westinghouse Air
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Genfit and Westinghouse is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Genfit 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 Genfit 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 Genfit 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 Genfit i.e., Genfit and Westinghouse Air go up and down completely randomly.
Pair Corralation between Genfit and Westinghouse Air
Given the investment horizon of 90 days Genfit is expected to under-perform the Westinghouse Air. In addition to that, Genfit is 2.95 times more volatile than Westinghouse Air Brake. It trades about -0.3 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.17 per unit of volatility. If you would invest 19,066 in Westinghouse Air Brake on August 29, 2024 and sell it today you would earn a total of 887.00 from holding Westinghouse Air Brake or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genfit vs. Westinghouse Air Brake
Performance |
| Timeline |
| Genfit |
| Westinghouse Air Brake |
Genfit and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genfit and Westinghouse Air
The main advantage of trading using opposite Genfit and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genfit 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.The idea behind Genfit and Westinghouse Air Brake pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Westinghouse Air vs. LB Foster | Westinghouse Air vs. Norfolk Southern | Westinghouse Air vs. Canadian Pacific Railway |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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