Correlation Between Westinghouse Air and Orchestra BioMed
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Orchestra BioMed 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 Orchestra BioMed 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 Orchestra BioMed Holdings, you can compare the effects of market volatilities on Westinghouse Air and Orchestra BioMed 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 Orchestra BioMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Orchestra BioMed.
Diversification Opportunities for Westinghouse Air and Orchestra BioMed
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Westinghouse and Orchestra is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Orchestra BioMed Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orchestra BioMed Holdings 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 Orchestra BioMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orchestra BioMed Holdings has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Orchestra BioMed go up and down completely randomly.
Pair Corralation between Westinghouse Air and Orchestra BioMed
Considering the 90-day investment horizon Westinghouse Air is expected to generate 1.72 times less return on investment than Orchestra BioMed. But when comparing it to its historical volatility, Westinghouse Air Brake is 4.62 times less risky than Orchestra BioMed. It trades about 0.24 of its potential returns per unit of risk. Orchestra BioMed Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 490.00 in Orchestra BioMed Holdings on September 3, 2024 and sell it today you would earn a total of 73.00 from holding Orchestra BioMed Holdings or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Orchestra BioMed Holdings
Performance |
| Timeline |
| Westinghouse Air Brake |
| Orchestra BioMed Holdings |
Westinghouse Air and Orchestra BioMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Orchestra BioMed
The main advantage of trading using opposite Westinghouse Air and Orchestra BioMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Orchestra BioMed 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 Orchestra BioMed will offset losses from the drop in Orchestra BioMed's long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| Orchestra BioMed vs. Tandy Leather Factory | Orchestra BioMed vs. Westinghouse Air Brake | Orchestra BioMed vs. Citi Trends | Orchestra BioMed vs. Nike Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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