Correlation Between Westinghouse Air and GP Investments
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and GP Investments 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 Westinghouse Air and GP Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and GP Investments, you can compare the effects of market volatilities on Westinghouse Air and GP Investments 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 Westinghouse Air with a short position of GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and GP Investments.
Diversification Opportunities for Westinghouse Air and GP Investments
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westinghouse and GPIV33 is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments and Westinghouse Air 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 Westinghouse Air Brake are associated (or correlated) with GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and GP Investments go up and down completely randomly.
Pair Corralation between Westinghouse Air and GP Investments
Assuming the 90 days trading horizon Westinghouse Air Brake is expected to generate 0.45 times more return on investment than GP Investments. However, Westinghouse Air Brake is 2.24 times less risky than GP Investments. It trades about 0.13 of its potential returns per unit of risk. GP Investments is currently generating about 0.04 per unit of risk. If you would invest 26,268 in Westinghouse Air Brake on October 11, 2024 and sell it today you would earn a total of 31,836 from holding Westinghouse Air Brake or generate 121.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. GP Investments
Performance |
| Timeline |
| Westinghouse Air Brake |
| GP Investments |
Westinghouse Air and GP Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and GP Investments
The main advantage of trading using opposite Westinghouse Air and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, GP Investments 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 GP Investments will offset losses from the drop in GP Investments' long position.| Westinghouse Air vs. STMicroelectronics NV | Westinghouse Air vs. DXC Technology | Westinghouse Air vs. Spotify Technology SA | Westinghouse Air vs. Take Two Interactive Software |
| GP Investments vs. Healthpeak Properties | GP Investments vs. United Rentals | GP Investments vs. Paycom Software | GP Investments vs. Clover Health Investments, |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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