Correlation Between Westinghouse Air and Greenbrier Companies
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Greenbrier Companies 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 Greenbrier Companies 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 Greenbrier Companies, you can compare the effects of market volatilities on Westinghouse Air and Greenbrier Companies 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 Greenbrier Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Greenbrier Companies.
Diversification Opportunities for Westinghouse Air and Greenbrier Companies
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and Greenbrier is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Greenbrier Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenbrier Companies 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 Greenbrier Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenbrier Companies has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Greenbrier Companies go up and down completely randomly.
Pair Corralation between Westinghouse Air and Greenbrier Companies
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 1.05 times more return on investment than Greenbrier Companies. However, Westinghouse Air is 1.05 times more volatile than Greenbrier Companies. It trades about -0.02 of its potential returns per unit of risk. Greenbrier Companies is currently generating about -0.08 per unit of risk. If you would invest 19,546 in Westinghouse Air Brake on November 18, 2024 and sell it today you would lose (727.00) from holding Westinghouse Air Brake or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Greenbrier Companies
Performance |
| Timeline |
| Westinghouse Air Brake |
| Greenbrier Companies |
Westinghouse Air and Greenbrier Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Greenbrier Companies
The main advantage of trading using opposite Westinghouse Air and Greenbrier Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Greenbrier Companies 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 Greenbrier Companies will offset losses from the drop in Greenbrier Companies' long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| Greenbrier Companies vs. LB Foster | Greenbrier Companies vs. Freightcar America | Greenbrier Companies vs. Westinghouse Air Brake | Greenbrier Companies vs. CSX Corporation |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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