Correlation Between Westinghouse Air and SYSTEMAIR
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and SYSTEMAIR 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 SYSTEMAIR 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 SYSTEMAIR AB, you can compare the effects of market volatilities on Westinghouse Air and SYSTEMAIR 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 SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and SYSTEMAIR.
Diversification Opportunities for Westinghouse Air and SYSTEMAIR
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and SYSTEMAIR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB 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 SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and SYSTEMAIR go up and down completely randomly.
Pair Corralation between Westinghouse Air and SYSTEMAIR
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.88 times more return on investment than SYSTEMAIR. However, Westinghouse Air Brake is 1.14 times less risky than SYSTEMAIR. It trades about 0.23 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about -0.57 per unit of risk. If you would invest 18,470 in Westinghouse Air Brake on October 19, 2024 and sell it today you would earn a total of 665.00 from holding Westinghouse Air Brake or generate 3.6% 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. SYSTEMAIR AB
Performance |
| Timeline |
| Westinghouse Air Brake |
| SYSTEMAIR AB |
Westinghouse Air and SYSTEMAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and SYSTEMAIR
The main advantage of trading using opposite Westinghouse Air and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, SYSTEMAIR 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 SYSTEMAIR will offset losses from the drop in SYSTEMAIR's long position.| Westinghouse Air vs. Mitsui Chemicals | Westinghouse Air vs. KINGBOARD CHEMICAL | Westinghouse Air vs. Addus HomeCare | Westinghouse Air vs. China BlueChemical |
| SYSTEMAIR vs. MOVIE GAMES SA | SYSTEMAIR vs. TROPHY GAMES DEV | SYSTEMAIR vs. FRACTAL GAMING GROUP | SYSTEMAIR vs. CONTAGIOUS GAMING INC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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