Correlation Between Westinghouse Air and Citizens
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Citizens 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 Citizens 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 Citizens, you can compare the effects of market volatilities on Westinghouse Air and Citizens 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 Citizens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Citizens.
Diversification Opportunities for Westinghouse Air and Citizens
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and Citizens is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Citizens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens 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 Citizens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Citizens go up and down completely randomly.
Pair Corralation between Westinghouse Air and Citizens
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 0.39 times more return on investment than Citizens. However, Westinghouse Air Brake is 2.54 times less risky than Citizens. It trades about 0.25 of its potential returns per unit of risk. Citizens is currently generating about -0.17 per unit of risk. If you would invest 18,861 in Westinghouse Air Brake on September 3, 2024 and sell it today you would earn a total of 1,201 from holding Westinghouse Air Brake or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Citizens
Performance |
| Timeline |
| Westinghouse Air Brake |
| Citizens |
Westinghouse Air and Citizens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Citizens
The main advantage of trading using opposite Westinghouse Air and Citizens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Citizens 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 Citizens will offset losses from the drop in Citizens' long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| Citizens vs. CNO Financial Group | Citizens vs. Brighthouse Financial | Citizens vs. FG Annuities Life | Citizens vs. Prudential Public Limited |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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