Correlation Between Mitsui Chemicals and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Mitsui Chemicals 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 Mitsui Chemicals and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Chemicals and Westinghouse Air Brake, you can compare the effects of market volatilities on Mitsui Chemicals 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 Mitsui Chemicals with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui Chemicals and Westinghouse Air.
Diversification Opportunities for Mitsui Chemicals and Westinghouse Air
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitsui and Westinghouse is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals 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 Mitsui Chemicals i.e., Mitsui Chemicals and Westinghouse Air go up and down completely randomly.
Pair Corralation between Mitsui Chemicals and Westinghouse Air
Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Westinghouse Air. In addition to that, Mitsui Chemicals is 1.34 times more volatile than Westinghouse Air Brake. It trades about -0.08 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.23 per unit of volatility. If you would invest 18,470 in Westinghouse Air Brake on October 19, 2024 and sell it today you would earn a total of 665.00 from holding Westinghouse Air Brake or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Mitsui Chemicals vs. Westinghouse Air Brake
Performance |
| Timeline |
| Mitsui Chemicals |
| Westinghouse Air Brake |
Mitsui Chemicals and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui Chemicals and Westinghouse Air
The main advantage of trading using opposite Mitsui Chemicals and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Chemicals 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.| Mitsui Chemicals vs. Sunny Optical Technology | Mitsui Chemicals vs. betterU Education Corp | Mitsui Chemicals vs. CAREER EDUCATION | Mitsui Chemicals vs. G8 EDUCATION |
| Westinghouse Air vs. Mitsui Chemicals | Westinghouse Air vs. KINGBOARD CHEMICAL | Westinghouse Air vs. Addus HomeCare | Westinghouse Air vs. China BlueChemical |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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