Correlation Between Westinghouse Air and DSV Panalpina
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and DSV Panalpina 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 DSV Panalpina 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 DSV Panalpina AS, you can compare the effects of market volatilities on Westinghouse Air and DSV Panalpina 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 DSV Panalpina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and DSV Panalpina.
Diversification Opportunities for Westinghouse Air and DSV Panalpina
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and DSV is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS 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 DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and DSV Panalpina go up and down completely randomly.
Pair Corralation between Westinghouse Air and DSV Panalpina
Assuming the 90 days horizon Westinghouse Air is expected to generate 1.48 times less return on investment than DSV Panalpina. But when comparing it to its historical volatility, Westinghouse Air Brake is 1.38 times less risky than DSV Panalpina. It trades about 0.09 of its potential returns per unit of risk. DSV Panalpina AS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 19,830 in DSV Panalpina AS on September 13, 2024 and sell it today you would earn a total of 620.00 from holding DSV Panalpina AS or generate 3.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Westinghouse Air Brake vs. DSV Panalpina AS
Performance |
| Timeline |
| Westinghouse Air Brake |
| DSV Panalpina AS |
Westinghouse Air and DSV Panalpina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and DSV Panalpina
The main advantage of trading using opposite Westinghouse Air and DSV Panalpina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, DSV Panalpina 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 DSV Panalpina will offset losses from the drop in DSV Panalpina's 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 |
| DSV Panalpina vs. BlueScope Steel Limited | DSV Panalpina vs. CECO ENVIRONMENTAL | DSV Panalpina vs. PLAYTIKA HOLDING DL 01 | DSV Panalpina vs. Khiron Life Sciences |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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