Correlation Between Westinghouse Air and PHN Frankfurt
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and PHN Frankfurt 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 PHN Frankfurt 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 PHN Frankfurt, you can compare the effects of market volatilities on Westinghouse Air and PHN Frankfurt 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 PHN Frankfurt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and PHN Frankfurt.
Diversification Opportunities for Westinghouse Air and PHN Frankfurt
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westinghouse and PHN is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and PHN Frankfurt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Frankfurt 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 PHN Frankfurt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Frankfurt has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and PHN Frankfurt go up and down completely randomly.
Pair Corralation between Westinghouse Air and PHN Frankfurt
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.55 times more return on investment than PHN Frankfurt. However, Westinghouse Air Brake is 1.82 times less risky than PHN Frankfurt. It trades about 0.18 of its potential returns per unit of risk. PHN Frankfurt is currently generating about 0.01 per unit of risk. If you would invest 18,645 in Westinghouse Air Brake on September 12, 2024 and sell it today you would earn a total of 770.00 from holding Westinghouse Air Brake or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Westinghouse Air Brake vs. PHN Frankfurt
Performance |
| Timeline |
| Westinghouse Air Brake |
| PHN Frankfurt |
Westinghouse Air and PHN Frankfurt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and PHN Frankfurt
The main advantage of trading using opposite Westinghouse Air and PHN Frankfurt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, PHN Frankfurt 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 PHN Frankfurt will offset losses from the drop in PHN Frankfurt's long position.| Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB | Westinghouse Air vs. Norsk Hydro ASA |
| PHN Frankfurt vs. Westinghouse Air Brake | PHN Frankfurt vs. JIAHUA STORES | PHN Frankfurt vs. Alaska Air Group | PHN Frankfurt vs. ETFS Coffee ETC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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