Correlation Between KINGBOARD CHEMICAL and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Westinghouse Air Brake, you can compare the effects of market volatilities on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Westinghouse Air.
Diversification Opportunities for KINGBOARD CHEMICAL and Westinghouse Air
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KINGBOARD and Westinghouse is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Westinghouse Air go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Westinghouse Air
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.37 times less return on investment than Westinghouse Air. In addition to that, KINGBOARD CHEMICAL is 2.43 times more volatile than Westinghouse Air Brake. It trades about 0.13 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.43 per unit of volatility. If you would invest 18,225 in Westinghouse Air Brake on October 31, 2024 and sell it today you would earn a total of 1,395 from holding Westinghouse Air Brake or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Westinghouse Air Brake
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Westinghouse Air Brake |
KINGBOARD CHEMICAL and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Westinghouse Air
The main advantage of trading using opposite KINGBOARD CHEMICAL and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc | KINGBOARD CHEMICAL vs. Apple Inc |
| Westinghouse Air vs. Aluminum of | Westinghouse Air vs. Brockhaus Capital Management | Westinghouse Air vs. Q2M Managementberatung AG | Westinghouse Air vs. Waste Management |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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