Correlation Between Westinghouse Air and NAGOYA RAILROAD
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and NAGOYA RAILROAD 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 NAGOYA RAILROAD 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 NAGOYA RAILROAD, you can compare the effects of market volatilities on Westinghouse Air and NAGOYA RAILROAD 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 NAGOYA RAILROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and NAGOYA RAILROAD.
Diversification Opportunities for Westinghouse Air and NAGOYA RAILROAD
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westinghouse and NAGOYA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and NAGOYA RAILROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAGOYA RAILROAD 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 NAGOYA RAILROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAGOYA RAILROAD has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and NAGOYA RAILROAD go up and down completely randomly.
Pair Corralation between Westinghouse Air and NAGOYA RAILROAD
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.87 times more return on investment than NAGOYA RAILROAD. However, Westinghouse Air Brake is 1.15 times less risky than NAGOYA RAILROAD. It trades about 0.13 of its potential returns per unit of risk. NAGOYA RAILROAD is currently generating about -0.04 per unit of risk. If you would invest 12,936 in Westinghouse Air Brake on November 1, 2024 and sell it today you would earn a total of 6,804 from holding Westinghouse Air Brake or generate 52.6% 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. NAGOYA RAILROAD
Performance |
| Timeline |
| Westinghouse Air Brake |
| NAGOYA RAILROAD |
Westinghouse Air and NAGOYA RAILROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and NAGOYA RAILROAD
The main advantage of trading using opposite Westinghouse Air and NAGOYA RAILROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, NAGOYA RAILROAD 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 NAGOYA RAILROAD will offset losses from the drop in NAGOYA RAILROAD's long position.| Westinghouse Air vs. Wizz Air Holdings | Westinghouse Air vs. AOI Electronics Co | Westinghouse Air vs. Delta Air Lines | Westinghouse Air vs. CHINA SOUTHN AIR H |
| NAGOYA RAILROAD vs. Westinghouse Air Brake | NAGOYA RAILROAD vs. Delta Air Lines | NAGOYA RAILROAD vs. Guangdong Investment Limited | NAGOYA RAILROAD vs. SEALED AIR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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