Correlation Between Westinghouse Air and Tourmaline Bio
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Tourmaline Bio 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 Tourmaline Bio 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 Tourmaline Bio, you can compare the effects of market volatilities on Westinghouse Air and Tourmaline Bio 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 Tourmaline Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Tourmaline Bio.
Diversification Opportunities for Westinghouse Air and Tourmaline Bio
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and Tourmaline is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Tourmaline Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Bio 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 Tourmaline Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Bio has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Tourmaline Bio go up and down completely randomly.
Pair Corralation between Westinghouse Air and Tourmaline Bio
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 0.28 times more return on investment than Tourmaline Bio. However, Westinghouse Air Brake is 3.58 times less risky than Tourmaline Bio. It trades about 0.25 of its potential returns per unit of risk. Tourmaline Bio is currently generating about -0.04 per unit of risk. If you would invest 18,187 in Westinghouse Air Brake on September 5, 2024 and sell it today you would earn a total of 2,083 from holding Westinghouse Air Brake or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Tourmaline Bio
Performance |
| Timeline |
| Westinghouse Air Brake |
| Tourmaline Bio |
Westinghouse Air and Tourmaline Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Tourmaline Bio
The main advantage of trading using opposite Westinghouse Air and Tourmaline Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Tourmaline Bio 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 Tourmaline Bio will offset losses from the drop in Tourmaline Bio's long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| Tourmaline Bio vs. SNDL Inc | Tourmaline Bio vs. Westinghouse Air Brake | Tourmaline Bio vs. AerSale Corp | Tourmaline Bio vs. NH Foods Ltd |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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