Correlation Between Westinghouse Air and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Choice Hotels 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 Choice Hotels 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 Choice Hotels International, you can compare the effects of market volatilities on Westinghouse Air and Choice Hotels 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 Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Choice Hotels.
Diversification Opportunities for Westinghouse Air and Choice Hotels
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westinghouse and Choice is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern 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 Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Choice Hotels go up and down completely randomly.
Pair Corralation between Westinghouse Air and Choice Hotels
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.85 times more return on investment than Choice Hotels. However, Westinghouse Air Brake is 1.18 times less risky than Choice Hotels. It trades about 0.29 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.22 per unit of risk. If you would invest 14,864 in Westinghouse Air Brake on September 12, 2024 and sell it today you would earn a total of 4,311 from holding Westinghouse Air Brake or generate 29.0% 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. Choice Hotels International
Performance |
| Timeline |
| Westinghouse Air Brake |
| Choice Hotels Intern |
Westinghouse Air and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Choice Hotels
The main advantage of trading using opposite Westinghouse Air and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Choice Hotels 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB | Westinghouse Air vs. Norsk Hydro ASA |
| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. INTERCONT HOTELS | Choice Hotels vs. Wyndham Hotels Resorts |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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