Correlation Between Westinghouse Air and LANDSEA HOMES
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and LANDSEA HOMES 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 LANDSEA HOMES 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 LANDSEA HOMES P, you can compare the effects of market volatilities on Westinghouse Air and LANDSEA HOMES 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 LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and LANDSEA HOMES.
Diversification Opportunities for Westinghouse Air and LANDSEA HOMES
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westinghouse and LANDSEA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P 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 LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and LANDSEA HOMES go up and down completely randomly.
Pair Corralation between Westinghouse Air and LANDSEA HOMES
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.62 times more return on investment than LANDSEA HOMES. However, Westinghouse Air Brake is 1.62 times less risky than LANDSEA HOMES. It trades about -0.23 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about -0.87 per unit of risk. If you would invest 19,190 in Westinghouse Air Brake on October 13, 2024 and sell it today you would lose (745.00) from holding Westinghouse Air Brake or give up 3.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. LANDSEA HOMES P
Performance |
| Timeline |
| Westinghouse Air Brake |
| LANDSEA HOMES P |
Westinghouse Air and LANDSEA HOMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and LANDSEA HOMES
The main advantage of trading using opposite Westinghouse Air and LANDSEA HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, LANDSEA HOMES 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 LANDSEA HOMES will offset losses from the drop in LANDSEA HOMES's long position.| Westinghouse Air vs. SOGECLAIR SA INH | Westinghouse Air vs. Guangdong Investment Limited | Westinghouse Air vs. MEDCAW INVESTMENTS LS 01 | Westinghouse Air vs. FAIR ISAAC |
| LANDSEA HOMES vs. MINCO SILVER | LANDSEA HOMES vs. Westinghouse Air Brake | LANDSEA HOMES vs. Altair Engineering | LANDSEA HOMES vs. SYSTEMAIR AB |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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