Correlation Between Westinghouse Air and Apple
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Westinghouse Air and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Apple.
Diversification Opportunities for Westinghouse Air and Apple
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and Apple is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Apple go up and down completely randomly.
Pair Corralation between Westinghouse Air and Apple
Assuming the 90 days horizon Westinghouse Air is expected to generate 1.09 times less return on investment than Apple. In addition to that, Westinghouse Air is 1.0 times more volatile than Apple Inc. It trades about 0.11 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.12 per unit of volatility. If you would invest 17,637 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 4,498 from holding Apple Inc or generate 25.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Apple Inc
Performance |
| Timeline |
| Westinghouse Air Brake |
| Apple Inc |
Westinghouse Air and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Apple
The main advantage of trading using opposite Westinghouse Air and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Westinghouse Air vs. ScanSource | Westinghouse Air vs. Marie Brizard Wine | Westinghouse Air vs. China Resources Beer | Westinghouse Air vs. Chunghwa Telecom Co |
| Apple vs. Nordic Semiconductor ASA | Apple vs. Altair Engineering | Apple vs. FORWARD AIR P | Apple vs. Westinghouse Air Brake |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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