Correlation Between Westinghouse Air and Metal Sky
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Metal Sky 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 Metal Sky 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 Metal Sky Star, you can compare the effects of market volatilities on Westinghouse Air and Metal Sky 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 Metal Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Metal Sky.
Diversification Opportunities for Westinghouse Air and Metal Sky
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westinghouse and Metal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star 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 Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Metal Sky go up and down completely randomly.
Pair Corralation between Westinghouse Air and Metal Sky
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 0.1 times more return on investment than Metal Sky. However, Westinghouse Air Brake is 9.61 times less risky than Metal Sky. It trades about -0.2 of its potential returns per unit of risk. Metal Sky Star is currently generating about -0.25 per unit of risk. If you would invest 20,287 in Westinghouse Air Brake on October 11, 2024 and sell it today you would lose (1,160) from holding Westinghouse Air Brake or give up 5.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.57% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Metal Sky Star
Performance |
| Timeline |
| Westinghouse Air Brake |
| Metal Sky Star |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Westinghouse Air and Metal Sky Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Metal Sky
The main advantage of trading using opposite Westinghouse Air and Metal Sky positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Metal Sky 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 Metal Sky will offset losses from the drop in Metal Sky's long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| Metal Sky vs. Cebu Air ADR | Metal Sky vs. Westinghouse Air Brake | Metal Sky vs. Victorias Secret Co | Metal Sky vs. Contextlogic |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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