Correlation Between Westinghouse Air and Air New
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Air New 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 Air New 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 Air New Zealand, you can compare the effects of market volatilities on Westinghouse Air and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Air New.
Diversification Opportunities for Westinghouse Air and Air New
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and Air is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Air New go up and down completely randomly.
Pair Corralation between Westinghouse Air and Air New
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.88 times more return on investment than Air New. However, Westinghouse Air Brake is 1.14 times less risky than Air New. It trades about 0.1 of its potential returns per unit of risk. Air New Zealand is currently generating about 0.0 per unit of risk. If you would invest 9,482 in Westinghouse Air Brake on October 31, 2024 and sell it today you would earn a total of 10,138 from holding Westinghouse Air Brake or generate 106.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Air New Zealand
Performance |
| Timeline |
| Westinghouse Air Brake |
| Air New Zealand |
Westinghouse Air and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Air New
The main advantage of trading using opposite Westinghouse Air and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| Westinghouse Air vs. Aluminum of | Westinghouse Air vs. Brockhaus Capital Management | Westinghouse Air vs. Q2M Managementberatung AG | Westinghouse Air vs. Waste Management |
| Air New vs. Haier Smart Home | Air New vs. FUYO GENERAL LEASE | Air New vs. CENTURIA OFFICE REIT | Air New vs. Air Lease |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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