Correlation Between Visa and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Westinghouse Air Brake, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Westinghouse Air.
Diversification Opportunities for Visa and Westinghouse Air
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Visa and Westinghouse is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Westinghouse Air go up and down completely randomly.
Pair Corralation between Visa and Westinghouse Air
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.71 times more return on investment than Westinghouse Air. However, Visa Class A is 1.42 times less risky than Westinghouse Air. It trades about 0.01 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about -0.3 per unit of risk. If you would invest 31,238 in Visa Class A on October 11, 2024 and sell it today you would earn a total of 22.00 from holding Visa Class A or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 90.48% |
| Values | Daily Returns |
Visa Class A vs. Westinghouse Air Brake
Performance |
| Timeline |
| Visa Class A |
| Westinghouse Air Brake |
Visa and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Westinghouse Air
The main advantage of trading using opposite Visa and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Westinghouse Air vs. STMicroelectronics NV | Westinghouse Air vs. DXC Technology | Westinghouse Air vs. Spotify Technology SA | Westinghouse Air vs. Take Two Interactive Software |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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