Correlation Between Westinghouse Air and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and QBE Insurance 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 QBE Insurance 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 QBE Insurance Group, you can compare the effects of market volatilities on Westinghouse Air and QBE Insurance 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 QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and QBE Insurance.
Diversification Opportunities for Westinghouse Air and QBE Insurance
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westinghouse and QBE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and QBE Insurance go up and down completely randomly.
Pair Corralation between Westinghouse Air and QBE Insurance
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 1.28 times more return on investment than QBE Insurance. However, Westinghouse Air is 1.28 times more volatile than QBE Insurance Group. It trades about 0.2 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.21 per unit of risk. If you would invest 18,889 in Westinghouse Air Brake on August 25, 2024 and sell it today you would earn a total of 1,026 from holding Westinghouse Air Brake or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. QBE Insurance Group
Performance |
| Timeline |
| Westinghouse Air Brake |
| QBE Insurance Group |
Westinghouse Air and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and QBE Insurance
The main advantage of trading using opposite Westinghouse Air and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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