Correlation Between Westinghouse Air and AIRBNB INC
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and AIRBNB INC 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 AIRBNB INC 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 AIRBNB INC DL 01, you can compare the effects of market volatilities on Westinghouse Air and AIRBNB INC 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 AIRBNB INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and AIRBNB INC.
Diversification Opportunities for Westinghouse Air and AIRBNB INC
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westinghouse and AIRBNB is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and AIRBNB INC DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIRBNB INC DL 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 AIRBNB INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIRBNB INC DL has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and AIRBNB INC go up and down completely randomly.
Pair Corralation between Westinghouse Air and AIRBNB INC
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.62 times more return on investment than AIRBNB INC. However, Westinghouse Air Brake is 1.61 times less risky than AIRBNB INC. It trades about 0.14 of its potential returns per unit of risk. AIRBNB INC DL 01 is currently generating about 0.03 per unit of risk. If you would invest 9,018 in Westinghouse Air Brake on September 1, 2024 and sell it today you would earn a total of 9,882 from holding Westinghouse Air Brake or generate 109.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
Westinghouse Air Brake vs. AIRBNB INC DL 01
Performance |
| Timeline |
| Westinghouse Air Brake |
| AIRBNB INC DL |
Westinghouse Air and AIRBNB INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and AIRBNB INC
The main advantage of trading using opposite Westinghouse Air and AIRBNB INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, AIRBNB INC 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 AIRBNB INC will offset losses from the drop in AIRBNB INC's long position.| Westinghouse Air vs. Union Pacific | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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