Correlation Between Westinghouse Air and Enter Air
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Enter Air 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 Enter Air 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 Enter Air SA, you can compare the effects of market volatilities on Westinghouse Air and Enter Air 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 Enter Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Enter Air.
Diversification Opportunities for Westinghouse Air and Enter Air
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Westinghouse and Enter is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Enter Air SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enter Air SA 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 Enter Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enter Air SA has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Enter Air go up and down completely randomly.
Pair Corralation between Westinghouse Air and Enter Air
Assuming the 90 days horizon Westinghouse Air is expected to generate 2.06 times less return on investment than Enter Air. But when comparing it to its historical volatility, Westinghouse Air Brake is 3.77 times less risky than Enter Air. It trades about 0.13 of its potential returns per unit of risk. Enter Air SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 859.00 in Enter Air SA on September 3, 2024 and sell it today you would earn a total of 353.00 from holding Enter Air SA or generate 41.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Enter Air SA
Performance |
| Timeline |
| Westinghouse Air Brake |
| Enter Air SA |
Westinghouse Air and Enter Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Enter Air
The main advantage of trading using opposite Westinghouse Air and Enter Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Enter Air 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 Enter Air will offset losses from the drop in Enter Air's long position.| Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB |
| Enter Air vs. Uber Technologies | Enter Air vs. Playtech plc | Enter Air vs. Hyatt Hotels | Enter Air vs. HYATT HOTELS A |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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