Correlation Between Westinghouse Air and Fair Isaac
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Fair Isaac 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 Fair Isaac 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 Fair Isaac Corp, you can compare the effects of market volatilities on Westinghouse Air and Fair Isaac 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 Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Fair Isaac.
Diversification Opportunities for Westinghouse Air and Fair Isaac
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westinghouse and Fair is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Fair Isaac Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac Corp 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 Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac Corp has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Fair Isaac go up and down completely randomly.
Pair Corralation between Westinghouse Air and Fair Isaac
Assuming the 90 days horizon Westinghouse Air is expected to generate 2.39 times less return on investment than Fair Isaac. But when comparing it to its historical volatility, Westinghouse Air Brake is 1.37 times less risky than Fair Isaac. It trades about 0.21 of its potential returns per unit of risk. Fair Isaac Corp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 185,850 in Fair Isaac Corp on August 30, 2024 and sell it today you would earn a total of 40,750 from holding Fair Isaac Corp or generate 21.93% 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. Fair Isaac Corp
Performance |
| Timeline |
| Westinghouse Air Brake |
| Fair Isaac Corp |
Westinghouse Air and Fair Isaac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Fair Isaac
The main advantage of trading using opposite Westinghouse Air and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Fair Isaac 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 Fair Isaac will offset losses from the drop in Fair Isaac's long position.| Westinghouse Air vs. Union Pacific | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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