Correlation Between Westinghouse Air and COMMERCIAL VEHICLE
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE, you can compare the effects of market volatilities on Westinghouse Air and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and COMMERCIAL VEHICLE.
Diversification Opportunities for Westinghouse Air and COMMERCIAL VEHICLE
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westinghouse and COMMERCIAL is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and COMMERCIAL VEHICLE go up and down completely randomly.
Pair Corralation between Westinghouse Air and COMMERCIAL VEHICLE
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.28 times more return on investment than COMMERCIAL VEHICLE. However, Westinghouse Air Brake is 3.56 times less risky than COMMERCIAL VEHICLE. It trades about 0.2 of its potential returns per unit of risk. COMMERCIAL VEHICLE is currently generating about -0.07 per unit of risk. If you would invest 17,591 in Westinghouse Air Brake on August 28, 2024 and sell it today you would earn a total of 1,444 from holding Westinghouse Air Brake or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. COMMERCIAL VEHICLE
Performance |
| Timeline |
| Westinghouse Air Brake |
| COMMERCIAL VEHICLE |
Westinghouse Air and COMMERCIAL VEHICLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and COMMERCIAL VEHICLE
The main advantage of trading using opposite Westinghouse Air and COMMERCIAL VEHICLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE will offset losses from the drop in COMMERCIAL VEHICLE's long position.| Westinghouse Air vs. Datang International Power | Westinghouse Air vs. Datadog | Westinghouse Air vs. LION ONE METALS | Westinghouse Air vs. KENNAMETAL INC |
| COMMERCIAL VEHICLE vs. KENNAMETAL INC | COMMERCIAL VEHICLE vs. Evolution Mining Limited | COMMERCIAL VEHICLE vs. Harmony Gold Mining | COMMERCIAL VEHICLE vs. G III Apparel Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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