Correlation Between Old Republic and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Westinghouse Air Brake, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Westinghouse Air.
Diversification Opportunities for Old Republic and Westinghouse Air
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Westinghouse is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International 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 Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Westinghouse Air go up and down completely randomly.
Pair Corralation between Old Republic and Westinghouse Air
Considering the 90-day investment horizon Old Republic International is expected to generate 0.95 times more return on investment than Westinghouse Air. However, Old Republic International is 1.05 times less risky than Westinghouse Air. It trades about 0.4 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.17 per unit of risk. If you would invest 3,530 in Old Republic International on August 29, 2024 and sell it today you would earn a total of 381.00 from holding Old Republic International or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Old Republic International vs. Westinghouse Air Brake
Performance |
| Timeline |
| Old Republic Interna |
| Westinghouse Air Brake |
Old Republic and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Westinghouse Air
The main advantage of trading using opposite Old Republic and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Global Indemnity PLC | Old Republic vs. Erie Indemnity | Old Republic vs. AMERISAFE | Old Republic vs. Diamond Hill 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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