Correlation Between Westinghouse Air and TAL Education
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and TAL Education 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 TAL Education 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 TAL Education Group, you can compare the effects of market volatilities on Westinghouse Air and TAL Education 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 TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and TAL Education.
Diversification Opportunities for Westinghouse Air and TAL Education
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westinghouse and TAL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group 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 TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and TAL Education go up and down completely randomly.
Pair Corralation between Westinghouse Air and TAL Education
Assuming the 90 days trading horizon Westinghouse Air Brake is expected to generate 0.31 times more return on investment than TAL Education. However, Westinghouse Air Brake is 3.18 times less risky than TAL Education. It trades about 0.18 of its potential returns per unit of risk. TAL Education Group is currently generating about 0.04 per unit of risk. If you would invest 33,838 in Westinghouse Air Brake on November 3, 2024 and sell it today you would earn a total of 26,601 from holding Westinghouse Air Brake or generate 78.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Westinghouse Air Brake vs. TAL Education Group
Performance |
| Timeline |
| Westinghouse Air Brake |
| TAL Education Group |
Westinghouse Air and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and TAL Education
The main advantage of trading using opposite Westinghouse Air and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, TAL Education 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 TAL Education will offset losses from the drop in TAL Education's long position.| Westinghouse Air vs. Take Two Interactive Software | Westinghouse Air vs. Burlington Stores, | Westinghouse Air vs. Medical Properties Trust, | Westinghouse Air vs. United Natural Foods, |
| TAL Education vs. United States Steel | TAL Education vs. Burlington Stores, | TAL Education vs. Metalurgica Gerdau SA | TAL Education vs. CVS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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