Correlation Between Westinghouse Air and BTU Metals
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and BTU Metals 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 BTU Metals 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 BTU Metals Corp, you can compare the effects of market volatilities on Westinghouse Air and BTU Metals 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 BTU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and BTU Metals.
Diversification Opportunities for Westinghouse Air and BTU Metals
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westinghouse and BTU is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and BTU Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTU Metals Corp 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 BTU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTU Metals Corp has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and BTU Metals go up and down completely randomly.
Pair Corralation between Westinghouse Air and BTU Metals
Considering the 90-day investment horizon Westinghouse Air is expected to generate 1.03 times less return on investment than BTU Metals. But when comparing it to its historical volatility, Westinghouse Air Brake is 1.26 times less risky than BTU Metals. It trades about 0.26 of its potential returns per unit of risk. BTU Metals Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.91 in BTU Metals Corp on September 1, 2024 and sell it today you would earn a total of 0.14 from holding BTU Metals Corp or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Westinghouse Air Brake vs. BTU Metals Corp
Performance |
| Timeline |
| Westinghouse Air Brake |
| BTU Metals Corp |
Westinghouse Air and BTU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and BTU Metals
The main advantage of trading using opposite Westinghouse Air and BTU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, BTU Metals 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 BTU Metals will offset losses from the drop in BTU Metals' long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. Norfolk Southern |
| BTU Metals vs. Alaska Air Group | BTU Metals vs. Xtant Medical Holdings | BTU Metals vs. Westinghouse Air Brake | BTU Metals vs. AerSale Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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