Correlation Between NYSE Composite and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Westinghouse Air Brake, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Westinghouse Air.
Diversification Opportunities for NYSE Composite and Westinghouse Air
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Westinghouse is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Westinghouse Air go up and down completely randomly.
Pair Corralation between NYSE Composite and Westinghouse Air
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.57 times less return on investment than Westinghouse Air. But when comparing it to its historical volatility, NYSE Composite is 1.93 times less risky than Westinghouse Air. It trades about 0.11 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 12,753 in Westinghouse Air Brake on November 9, 2024 and sell it today you would earn a total of 7,996 from holding Westinghouse Air Brake or generate 62.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Westinghouse Air Brake
Performance |
| Timeline |
NYSE Composite and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Westinghouse Air Brake
Pair trading matchups for Westinghouse Air
Pair Trading with NYSE Composite and Westinghouse Air
The main advantage of trading using opposite NYSE Composite and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Integrated Media Technology | NYSE Composite vs. Custom Truck One | NYSE Composite vs. Funko Inc | NYSE Composite vs. Multi Ways Holdings |
| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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