Correlation Between Westinghouse Air and MSAD INSURANCE
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and MSAD INSURANCE 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 MSAD INSURANCE 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 MSAD INSURANCE, you can compare the effects of market volatilities on Westinghouse Air and MSAD INSURANCE 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 MSAD INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and MSAD INSURANCE.
Diversification Opportunities for Westinghouse Air and MSAD INSURANCE
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and MSAD is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and MSAD INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD INSURANCE 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 MSAD INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD INSURANCE has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and MSAD INSURANCE go up and down completely randomly.
Pair Corralation between Westinghouse Air and MSAD INSURANCE
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.73 times more return on investment than MSAD INSURANCE. However, Westinghouse Air Brake is 1.37 times less risky than MSAD INSURANCE. It trades about 0.13 of its potential returns per unit of risk. MSAD INSURANCE is currently generating about 0.08 per unit of risk. If you would invest 13,051 in Westinghouse Air Brake on September 1, 2024 and sell it today you would earn a total of 5,849 from holding Westinghouse Air Brake or generate 44.82% 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. MSAD INSURANCE
Performance |
| Timeline |
| Westinghouse Air Brake |
| MSAD INSURANCE |
Westinghouse Air and MSAD INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and MSAD INSURANCE
The main advantage of trading using opposite Westinghouse Air and MSAD INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, MSAD INSURANCE 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 MSAD INSURANCE will offset losses from the drop in MSAD INSURANCE's long position.| Westinghouse Air vs. Union Pacific | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech |
| MSAD INSURANCE vs. SIVERS SEMICONDUCTORS AB | MSAD INSURANCE vs. Darden Restaurants | MSAD INSURANCE vs. Reliance Steel Aluminum | MSAD INSURANCE vs. Q2M Managementberatung AG |
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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