Correlation Between Westinghouse Air and Allkem
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Allkem 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 Allkem 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 Allkem, you can compare the effects of market volatilities on Westinghouse Air and Allkem 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 Allkem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Allkem.
Diversification Opportunities for Westinghouse Air and Allkem
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westinghouse and Allkem is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Allkem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allkem 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 Allkem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allkem has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Allkem go up and down completely randomly.
Pair Corralation between Westinghouse Air and Allkem
If you would invest 16,770 in Westinghouse Air Brake on August 29, 2024 and sell it today you would earn a total of 3,401 from holding Westinghouse Air Brake or generate 20.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 1.56% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Allkem
Performance |
| Timeline |
| Westinghouse Air Brake |
| Allkem |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Westinghouse Air and Allkem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Allkem
The main advantage of trading using opposite Westinghouse Air and Allkem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Allkem 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 Allkem will offset losses from the drop in Allkem's long position.| Westinghouse Air vs. LB Foster | Westinghouse Air vs. Trinity Industries | Westinghouse Air vs. Norfolk Southern | Westinghouse Air vs. Canadian Pacific Railway |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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