Correlation Between Westinghouse Air and United States

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on Westinghouse Air and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and United States.

Diversification Opportunities for Westinghouse Air and United States

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Westinghouse and United is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and United States go up and down completely randomly.

Pair Corralation between Westinghouse Air and United States

Assuming the 90 days trading horizon Westinghouse Air Brake is expected to under-perform the United States. But the stock apears to be less risky and, when comparing its historical volatility, Westinghouse Air Brake is 2.49 times less risky than United States. The stock trades about -0.17 of its potential returns per unit of risk. The United States Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  19,920  in United States Steel on October 14, 2024 and sell it today you would earn a total of  720.00  from holding United States Steel or generate 3.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Westinghouse Air Brake  vs.  United States Steel

 Performance 
       Timeline  
Westinghouse Air Brake 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Westinghouse Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.
United States Steel 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in United States Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Westinghouse Air and United States Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Westinghouse Air and United States

The main advantage of trading using opposite Westinghouse Air and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.
The idea behind Westinghouse Air Brake and United States Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

Other Complementary Tools

Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance