Correlation Between Westinghouse Air and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and BBVA Banco 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 BBVA Banco 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 BBVA Banco Frances, you can compare the effects of market volatilities on Westinghouse Air and BBVA Banco 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 BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and BBVA Banco.
Diversification Opportunities for Westinghouse Air and BBVA Banco
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westinghouse and BBVA is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances 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 BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and BBVA Banco go up and down completely randomly.
Pair Corralation between Westinghouse Air and BBVA Banco
Assuming the 90 days horizon Westinghouse Air Brake is expected to under-perform the BBVA Banco. But the stock apears to be less risky and, when comparing its historical volatility, Westinghouse Air Brake is 4.03 times less risky than BBVA Banco. The stock trades about -0.21 of its potential returns per unit of risk. The BBVA Banco Frances is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,500 in BBVA Banco Frances on September 23, 2024 and sell it today you would earn a total of 60.00 from holding BBVA Banco Frances or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. BBVA Banco Frances
Performance |
| Timeline |
| Westinghouse Air Brake |
| BBVA Banco Frances |
Westinghouse Air and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and BBVA Banco
The main advantage of trading using opposite Westinghouse Air and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| Westinghouse Air vs. Union Pacific | Westinghouse Air vs. Canadian National Railway | Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. MTR Limited |
| BBVA Banco vs. Westinghouse Air Brake | BBVA Banco vs. WIZZ AIR HLDGUNSPADR4 | BBVA Banco vs. Coeur Mining | BBVA Banco vs. MYFAIR GOLD P |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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