Correlation Between LG Display and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both LG Display 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 LG Display and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Westinghouse Air Brake, you can compare the effects of market volatilities on LG Display 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 LG Display with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Westinghouse Air.
Diversification Opportunities for LG Display and Westinghouse Air
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGA and Westinghouse is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LG Display 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 LG Display 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 LG Display 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 LG Display i.e., LG Display and Westinghouse Air go up and down completely randomly.
Pair Corralation between LG Display and Westinghouse Air
Assuming the 90 days horizon LG Display Co is expected to under-perform the Westinghouse Air. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.61 times less risky than Westinghouse Air. The stock trades about -0.13 of its potential returns per unit of risk. The Westinghouse Air Brake is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 17,292 in Westinghouse Air Brake on September 1, 2024 and sell it today you would earn a total of 1,608 from holding Westinghouse Air Brake or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Westinghouse Air Brake
Performance |
| Timeline |
| LG Display |
| Westinghouse Air Brake |
LG Display and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Westinghouse Air
The main advantage of trading using opposite LG Display and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display 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.| LG Display vs. Apple Inc | LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co |
| Westinghouse Air vs. Union Pacific | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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