Correlation Between Westinghouse Air and Virco Manufacturing
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Virco Manufacturing 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 Virco Manufacturing 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 Virco Manufacturing, you can compare the effects of market volatilities on Westinghouse Air and Virco Manufacturing 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 Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Virco Manufacturing.
Diversification Opportunities for Westinghouse Air and Virco Manufacturing
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westinghouse and Virco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing 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 Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Virco Manufacturing go up and down completely randomly.
Pair Corralation between Westinghouse Air and Virco Manufacturing
Considering the 90-day investment horizon Westinghouse Air is expected to generate 2.49 times less return on investment than Virco Manufacturing. But when comparing it to its historical volatility, Westinghouse Air Brake is 3.1 times less risky than Virco Manufacturing. It trades about 0.11 of its potential returns per unit of risk. Virco Manufacturing is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 423.00 in Virco Manufacturing on September 4, 2024 and sell it today you would earn a total of 1,242 from holding Virco Manufacturing or generate 293.62% 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. Virco Manufacturing
Performance |
| Timeline |
| Westinghouse Air Brake |
| Virco Manufacturing |
Westinghouse Air and Virco Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Virco Manufacturing
The main advantage of trading using opposite Westinghouse Air and Virco Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Virco Manufacturing 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 Virco Manufacturing will offset losses from the drop in Virco Manufacturing's long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| Virco Manufacturing vs. Genpact Limited | Virco Manufacturing vs. Broadridge Financial Solutions | Virco Manufacturing vs. BrightView Holdings | Virco Manufacturing vs. First Advantage Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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