Correlation Between ENTERGY and Westinghouse Air
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By analyzing existing cross correlation between ENTERGY ARK INC and Westinghouse Air Brake, you can compare the effects of market volatilities on ENTERGY 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 ENTERGY with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENTERGY and Westinghouse Air.
Diversification Opportunities for ENTERGY and Westinghouse Air
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ENTERGY and Westinghouse is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ENTERGY ARK INC 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 ENTERGY 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 ENTERGY ARK INC 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 ENTERGY i.e., ENTERGY and Westinghouse Air go up and down completely randomly.
Pair Corralation between ENTERGY and Westinghouse Air
Assuming the 90 days trading horizon ENTERGY ARK INC is expected to generate 56.41 times more return on investment than Westinghouse Air. However, ENTERGY is 56.41 times more volatile than Westinghouse Air Brake. It trades about 0.07 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.11 per unit of risk. If you would invest 9,642 in ENTERGY ARK INC on September 3, 2024 and sell it today you would lose (81.00) from holding ENTERGY ARK INC or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.15% |
| Values | Daily Returns |
ENTERGY ARK INC vs. Westinghouse Air Brake
Performance |
| Timeline |
| ENTERGY ARK INC |
| Westinghouse Air Brake |
ENTERGY and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENTERGY and Westinghouse Air
The main advantage of trading using opposite ENTERGY and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENTERGY 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.The idea behind ENTERGY ARK INC and Westinghouse Air Brake pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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