Correlation Between Westinghouse Air and Black Hills
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Black Hills 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 Black Hills 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 Black Hills, you can compare the effects of market volatilities on Westinghouse Air and Black Hills 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 Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Black Hills.
Diversification Opportunities for Westinghouse Air and Black Hills
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westinghouse and Black is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Black Hills go up and down completely randomly.
Pair Corralation between Westinghouse Air and Black Hills
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 1.11 times more return on investment than Black Hills. However, Westinghouse Air is 1.11 times more volatile than Black Hills. It trades about 0.12 of its potential returns per unit of risk. Black Hills is currently generating about 0.1 per unit of risk. If you would invest 16,246 in Westinghouse Air Brake on September 3, 2024 and sell it today you would earn a total of 3,816 from holding Westinghouse Air Brake or generate 23.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Black Hills
Performance |
| Timeline |
| Westinghouse Air Brake |
| Black Hills |
Westinghouse Air and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Black Hills
The main advantage of trading using opposite Westinghouse Air and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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