Correlation Between Westinghouse Air and TechnipFMC Plc
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and TechnipFMC Plc 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 TechnipFMC Plc 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 TechnipFMC plc, you can compare the effects of market volatilities on Westinghouse Air and TechnipFMC Plc 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 TechnipFMC Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and TechnipFMC Plc.
Diversification Opportunities for Westinghouse Air and TechnipFMC Plc
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and TechnipFMC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and TechnipFMC plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC plc 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 TechnipFMC Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC plc has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and TechnipFMC Plc go up and down completely randomly.
Pair Corralation between Westinghouse Air and TechnipFMC Plc
Assuming the 90 days trading horizon Westinghouse Air Brake is expected to generate 1.06 times more return on investment than TechnipFMC Plc. However, Westinghouse Air is 1.06 times more volatile than TechnipFMC plc. It trades about 0.09 of its potential returns per unit of risk. TechnipFMC plc is currently generating about -0.15 per unit of risk. If you would invest 58,688 in Westinghouse Air Brake on November 7, 2024 and sell it today you would earn a total of 1,492 from holding Westinghouse Air Brake or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Westinghouse Air Brake vs. TechnipFMC plc
Performance |
| Timeline |
| Westinghouse Air Brake |
| TechnipFMC plc |
Westinghouse Air and TechnipFMC Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and TechnipFMC Plc
The main advantage of trading using opposite Westinghouse Air and TechnipFMC Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, TechnipFMC Plc 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 TechnipFMC Plc will offset losses from the drop in TechnipFMC Plc's long position.| Westinghouse Air vs. Taiwan Semiconductor Manufacturing | Westinghouse Air vs. Apple Inc | Westinghouse Air vs. Alibaba Group Holding | Westinghouse Air vs. Microsoft |
| TechnipFMC Plc vs. Ameriprise Financial | TechnipFMC Plc vs. Sony Group | TechnipFMC Plc vs. Energisa SA | TechnipFMC Plc vs. BTG Pactual Logstica |
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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