Correlation Between Freightcar America and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Freightcar America 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 Freightcar America and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freightcar America and Westinghouse Air Brake, you can compare the effects of market volatilities on Freightcar America 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 Freightcar America with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freightcar America and Westinghouse Air.
Diversification Opportunities for Freightcar America and Westinghouse Air
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freightcar and Westinghouse is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Freightcar America 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 Freightcar America 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 Freightcar America 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 Freightcar America i.e., Freightcar America and Westinghouse Air go up and down completely randomly.
Pair Corralation between Freightcar America and Westinghouse Air
Given the investment horizon of 90 days Freightcar America is expected to under-perform the Westinghouse Air. In addition to that, Freightcar America is 7.82 times more volatile than Westinghouse Air Brake. It trades about -0.07 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.16 per unit of volatility. If you would invest 18,952 in Westinghouse Air Brake on August 23, 2024 and sell it today you would earn a total of 851.00 from holding Westinghouse Air Brake or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freightcar America vs. Westinghouse Air Brake
Performance |
| Timeline |
| Freightcar America |
| Westinghouse Air Brake |
Freightcar America and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freightcar America and Westinghouse Air
The main advantage of trading using opposite Freightcar America and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freightcar America 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.| Freightcar America vs. Greenbrier Companies | Freightcar America vs. LB Foster | Freightcar America vs. Westinghouse Air Brake | Freightcar America vs. CSX Corporation |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |