Correlation Between Westinghouse Air and Catalyst Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals, you can compare the effects of market volatilities on Westinghouse Air and Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Catalyst Pharmaceuticals.
Diversification Opportunities for Westinghouse Air and Catalyst Pharmaceuticals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and Catalyst is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Catalyst Pharmaceuticals go up and down completely randomly.
Pair Corralation between Westinghouse Air and Catalyst Pharmaceuticals
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 0.46 times more return on investment than Catalyst Pharmaceuticals. However, Westinghouse Air Brake is 2.15 times less risky than Catalyst Pharmaceuticals. It trades about 0.18 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about 0.07 per unit of risk. If you would invest 11,452 in Westinghouse Air Brake on August 24, 2024 and sell it today you would earn a total of 8,351 from holding Westinghouse Air Brake or generate 72.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Catalyst Pharmaceuticals
Performance |
| Timeline |
| Westinghouse Air Brake |
| Catalyst Pharmaceuticals |
Westinghouse Air and Catalyst Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Catalyst Pharmaceuticals
The main advantage of trading using opposite Westinghouse Air and Catalyst Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals will offset losses from the drop in Catalyst Pharmaceuticals' long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| Catalyst Pharmaceuticals vs. Day One Biopharmaceuticals | Catalyst Pharmaceuticals vs. Terns Pharmaceuticals | Catalyst Pharmaceuticals vs. X4 Pharmaceuticals | Catalyst Pharmaceuticals vs. Inozyme Pharma |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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