Correlation Between Westinghouse Air and Iron Mountain
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Iron Mountain 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 Iron Mountain 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 Iron Mountain Incorporated, you can compare the effects of market volatilities on Westinghouse Air and Iron Mountain 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 Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Iron Mountain.
Diversification Opportunities for Westinghouse Air and Iron Mountain
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Westinghouse and Iron is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain 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 Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Iron Mountain go up and down completely randomly.
Pair Corralation between Westinghouse Air and Iron Mountain
Assuming the 90 days trading horizon Westinghouse Air is expected to generate 1.6 times less return on investment than Iron Mountain. But when comparing it to its historical volatility, Westinghouse Air Brake is 1.84 times less risky than Iron Mountain. It trades about 0.13 of its potential returns per unit of risk. Iron Mountain Incorporated is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 27,077 in Iron Mountain Incorporated on October 16, 2024 and sell it today you would earn a total of 33,931 from holding Iron Mountain Incorporated or generate 125.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 67.21% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Iron Mountain Incorporated
Performance |
| Timeline |
| Westinghouse Air Brake |
| Iron Mountain |
Westinghouse Air and Iron Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Iron Mountain
The main advantage of trading using opposite Westinghouse Air and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.| Westinghouse Air vs. Marvell Technology | Westinghouse Air vs. Align Technology | Westinghouse Air vs. Roper Technologies, | Westinghouse Air vs. Unity Software |
| Iron Mountain vs. Applied Materials, | Iron Mountain vs. Fair Isaac | Iron Mountain vs. Westinghouse Air Brake | Iron Mountain vs. Cardinal Health, |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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